bostonbubble.com

balor123 · Joined: 08 Mar 2008 Posts: 1204

It is true that real estate can be just as risky but the nice thing about buying and renting is that you can convert your work into money. If you buy an REIT, then you have to hire others. So you employ yourself. For some the pay is good and for others not so good. You can increase the value of the pay if you buy a duplex and rent the other side though.

GenXer · Joined: 20 Feb 2009 Posts: 703

Which value is it? The same value that is now 50% less than what you paid for it? There is no value. Its a myth. Just like there is no 'value' in stocks. The price movements overwhelm any 'fair' value that you may have, especially when prices move the way they do now - in response to a recession. Why would you want to waste your valuable time in addition to wasting money? Let others do the work. You can make a much better return on investment by opening a business (also subject to luck), as well as investing so that others do the work for you, and you simply collect dividends. Buying a rental property is silly. You can make more money investing your principal in bonds. Do the math, its that simple. Again, this is only true if you invest your own money, rather than borrowed money. A concept involving the investment of borrowed money is flawed from the start (i.e. buying property with loans), as any profits you make are diminished by having to pay for using bank's money. And you can not have the property otherwise (i.e. you can not afford it). But if you invest your OWN money into bonds, for example, all the profit is yours, and while it may seem low, it is actually much more predictable and much more assured (at a much smaller risk), and requiring 0 work from you! You can also have a full time job and spend weekends with your family rather than at the rental property making repairs.

balor123 · Joined: 08 Mar 2008 Posts: 1204

I agree with you about the benefit of your labor being insignificant but it also depends on the relative value of your labor to that of the property. It is for this reason that I don't pick stocks. The value gained by any insight that I may have is dwarfed by market movements outside of my control.