Yes, the very first retort to this statement is "it depends" what you expect from your investment. I agree.
Plus, I don't want to debate anybody, lol.
But let's talk about it.
Real estate as a vehicle for wealth creation
A few years ago, when I was an employee at a company (owned by somebody else) and I was able to project my salary at least a year into the future. It was also before the COVID19 pandemic, so I decided I wanted to invest in some kind of asset for my future. The asset of choice was of course real estate.
I put a downpayment on a property in a brand new building downtown. I put about $15k on a 30 Square meter office space + a 12m parking lot.
$52.5K for the office
$17.0K for the lot
$70,000 total and paid for.
The building is actually quite nice. It has lots of road access, parking space, meeting areas, food courts and loads of service providers like internet and construction in case you wanted to make some modifications like divisions or get yourself an air conditioning unit installed.
This is an older picture I have before I put in the electrical connections and plasterboard. It doesn't look like a tomb anymore.
The office space pays about $1,400 a year in maintenance and about $1,000 in property taxes. I've had it for three years which means the office has cost me about $76,000. I've also rented it for 1 year at a price of $6,000 a year. So as of now, I'm still $70K in the hole.
There is an incredible amount of real estate being developed in my city, and I've already put it up for sale. I'm asking $95K for the property, but would realistically be willing to let it go for $85K, which minus commissions and taxes would be a return of about 18% after 3 years.
I'm not impressed.
Sure it was the "safe" way to make some money, but after having to deal with tenants, the building's owner committee, lawyers, property licenses and paperwork... that's a whole lot of cash and time for like 6% APR.
Real estate as a vehicle for wealth preservation
OK, so maybe real estate is not the best asset class for wealth creation, but a great asset class for wealth preservation.
After year one, I decided to take out a loan for $40,000 against my property and invest it in my company, which has a 35% profit margin.
I'm paying about 8% a year in interest and I used my property as collateral to get cash to make more money. But guess how long the loan process took? 10 months! That's right, almost a year to get the money!
So I have the asset, I got the cash and now it's sitting there in case I need to sell it or ask for another loan. Fine, I guess I'll give it that.
It's a pretty good asset to keep as equity.
But... what if I want to sell it quickly?
The property has been for sale for a year now, costing me maintenance and property taxes. I'm not in a terrible hurry to get rid of it, but what if I was? I'd probably have to put it on the market at a lower price than what I bought it for and even if I did manage to sell it, It would take months in paperwork for me to actually receive my cash and hand over the property.
Hive and Bitcoin as vehicles for wealth creation
What do you think the upside of $HIVE or $BTC might be in the coming years? It's anybody's guess, but I think Bitcoin could easily reach $100,000 in the next few years (4x from current price) and HIVE could do anywhere from a 3x to who knows.
So if I'm not starving right now, I'm not sick, I don't need to protect some generational fortune... why not shift my investment strategy from something that is making me 6% a year to something that is riskier, but can potentially make 500% or even more?
Once I'm able to make some profit from Bitcoin or HIVE, I can switch my risk profile to something more in line with wealth preservation (risk off).
The answers to these questions might be different for everybody, but at least for me, I'm leaning towards risk on investments right now in favor of larger upside potential.
Also, I don't necessarily have to go all in. It's perfectly possible to buy some cryptocurrency, some stable coins and even a bit of metals.
I'm not in wealth preservation mode at this time.
Thoughts?
Disclaimer: I am not any kind of financial advice professional, I have a very average IQ and low EQ and I'm pretty regular looking, tell bad jokes and come from an average income family. So don't go sell your house and ape into anything I say I will. Also, I'm drinking beer at the time of writing this, so be particularly weary of anything I write.
Photos are my own.
Image of me trading cryptocurrency was created using Mid Journey.
Posted Using LeoFinance Alphan
I think the best option is to mix both fields
If, hypothetically, I sold the property tomorrow. Let's say for $90K. I'd pay off the $40K loan and be left with $50K in cash. It's really not a lot. What would you do then?
Difficult question indeed. I myself have the same doubts. In my country there are also options to invest in short-term real estate through crowdfunding/crowdlending platforms... you can get annual returns of 10 to 12% a year for loans between 12 and 36 months... the problem is that if for whatever reason, you need the money, the loan must expire.
Then there are other platforms where you can lend your car to others as if you were a rental car company. There are many people who buy small used cars that are about 5 years old and with less than 70,000 km and lend them to obtain a very juicy monthly income, especially in cities.
The returns here are much higher, we are talking about 30% per year. Furthermore, once you exceed a certain level of km, ie 100,000 km, you can even sell it and make the investment more profitable...
I don't know, these are some ideas I have besides buying BITCOIN or HIVE.
I'll listen to any business proposal over 20%. I'm totally down to venture into a business like rental car. Of course, I'd have to gauge the costs and risk associated with it. But do you see my point though? I feel like opportunity cost of having my money parked in real estate is too high. There are many other investment opportunities out there.
I understand it perfectly, that's why I propose things that are more short-term.
Don't put your eggs in one basket as they say.
It depends on what type of building you're buying as well. Over here I see a lot of office space being empty while residential buildings are doing well and increase in value.
They say bricks and mortar are still more secure if you can hold onto it.
Absolutely top advice!
Don't put your eggs in one basket. The thing is, I put my eggs in the real estate basket and I honestly don't think I'm getting my money's worth. I'm thinking about putting it in another basket. It doesn't have to be cryptocurrency, but my risk profile is definitely a little more risk on.
Looks good, the office. But you are certainly right, real estate is in general nothing that will make you rich but a good wealth preservation. To grow wealth and suitable for everyone you better invest in the stock market and crypto.
I'm ready man.
I'm totally down to shift to a higher risk profile. It's money I can "afford to lose" meaning I won't starve or be homeless. And if you ask me, HIVE and Bitcoin are not exactly losing bets.
🙌🏻 Yes I also have Bitcoin and Hive as my biggest bets on crypto, along with ETH 🫣
But with a family to feed my risk profile is still moderate with a bigger exposure in the stock market with focus on blue chips.
In the traditional investment options, Land is one of the best earners, but it takes time. I also bought a condo unit for investment, but I too am looking to sell it because it is earning me so little. If I were to put even half [or 30 percent of what it's worth now] of what I paid for in HBD savings, I would earn more than the rentals I get from it. Crypto has higher risk, but has insanely higher upside. If you want to be safe with your cash, I think land is still a really good investment. But if you have extra cash lying around doing nothing, putting it in crypto can be good. I am already thinking of slowly putting my savings in HBD savings because that 20 percent is so good.
Yeah. Everybody says that land is a great investment. I hadn't taken into account the over supply there seems to be on the market, particularly after COVID. I also hadn't considered the los APR% compared to other options.
Real estate just isn't for me right now.
Same for me. If you still want fiat investments, stocks might be the faster one. It is higher risk than land, and also not for everyone though. My current strategy is to look for stocks that pay out more than 10 percent dividend per year. So even if I have to hold it when it goes down, I still earn from it. There are also no property tax, association dues, or miscellaneous fees that eat into my income.
Hive is definitely a good investment, man. There are a lot of games, dApps and more. It has great potential and in a bull season I think it could easily go up a few dollars in price. I would really like that to happen 😆
May Saint Satoshi hear your prayers.
I think it's very likely to happen based on the amount of development going on, marketing through Leo initiatives + Freechain the movie + engagement in web2...
Maybe not a moon shot, but 4x is easy.
I love this joke XD
4x sounds perfect. As you said, I think the movie Freechain will be a good advertisement for this. We'll see together.
Amazing write-up bro, the idea of HIVE and Bitcoin as a vehicle for wealth creation is advisable because one can easily take very high risks and make it big on HIVE and Bitcoin(speculative risk) and then invest the fund in other less-risk investments but with a reasonable profit. Thanks for sharing your thoughts on this boss man.
Thanks my friend!
Yeah, this is what works for me. Not saying anybody else should follow my lead. BUT I do think that both HIVE and Bitcoin have huge upside potential. If growth is your thing, buy them and make some profit.
Exactly, thanks bro.
@tipu curate
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I don't have all the answers. What would you do?
I think that perhaps the right and logical choice might be to diversify and mix more robust but low APR investments and much riskier investments that have much higher APR potentials.
I like this investment possibility that you thought of:
!BEER
I could also keep the lot and sell the office. That's actually not a terrible idea.
View or trade
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Hmmm difficult to choose between this. I will say the best is to mix both of them
I can't invest $50K in real estate. I would have to purchase something very low income in a bad neighborhood. I think I'm going to follow my nipples and go risk on into digital assets.
But digital assets is also risky as it can disappear anytime since it is not physical
That's what I'm saying.
We're going risk on.
Yea life is risk
What do you think @scaredycatguide , You're the real estate guru. Drop some thoughts!
The truth is I bet on investing as much as possible in hive because when the next bull room explodes it will rise up to 500% imo.
Better start then bruv.
Yes, I always take a % of my rewards to save in hive, as much as my finances allow.
!PIZZA
!LADY
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Well, it is better to go for the two
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