Why not Real Estate instead of Stocks?

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Dusn
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Re: Why not Real Estate instead of Stocks?

Post by Dusn »

I hear about the 1% rule for real estate a lot. But in what parts of the country do people find single-family homes that can rent for 1% of the home value? I've never seen, rented or owned a single-family home that could be rented for 1% of the cost of the home. (I've only lived on the East coast of the US).

Is the 1% rule for multi-family rentals or apartment buildings?
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Abe
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Re: Why not Real Estate instead of Stocks?

Post by Abe »

Dusn wrote: Wed Sep 22, 2021 3:07 pm I hear about the 1% rule for real estate a lot. But in what parts of the country do people find single-family homes that can rent for 1% of the home value? I've never seen, rented or owned a single-family home that could be rented for 1% of the cost of the home. (I've only lived on the East coast of the US).

Is the 1% rule for multi-family rentals or apartment buildings?
It's just a rule of thumb, but as you say, it doesn't apply to all areas of the country especially HCOL areas where real estate prices are extremely high. If you can't find houses that rent for around 1% of the value, maybe there is a message there. If it doesn't pencil out, maybe you shouldn't buy it.
Slow and steady wins the race.
stocknoob4111
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Re: Why not Real Estate instead of Stocks?

Post by stocknoob4111 »

With the stock market faltering Real Estate seems to be holding up extremely well despite all sorts of headwinds, especially if projections are to be believed Real Estate will climb another 10-20% this year depending on market. That is simply astonishing performance compared with the stock market which is falling in the backdrop of high inflation.

What is perplexing is that despite skyrocketing prices consumers are able to bring boatloads of cash to the table to make generous offers above the asking price and to also qualify for these nosebleed level prices. That must mean that there are loads of people who have plenty of cash in reserves and household income must be very high and growing at a healthy rate.
visualguy
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Re: Why not Real Estate instead of Stocks?

Post by visualguy »

Real estate in good locations is the quintessential investment, and holds up well with inflation. My grandparents had nothing in the stock market, just real estate. My parents had most of their investments in real estate, and little in stocks. Served them very well. I went about half US stocks, half real estate. It is more work, though, and difficult to manage when you're really old. At that point you can sell or pass to the next generation.
seajay
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Re: Why not Real Estate instead of Stocks?

Post by seajay »

Real estate alongside stocks (and bonds and gold) for me. Owner occupier, imputed rent benefit, liability matched rent. Both landlord and tenant, so if rents soar or collapse - Meh! A useful backstop/plan-B for if/when capital is exhausted later in life sell the property to fund all-inclusive care home costs.
hudson
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Re: Why not Real Estate instead of Stocks?

Post by hudson »

Except for my own house, (I'm not a real estate person.) if left with the choice between stocks and real estate, I would do lots of homework, get advice from my landlord friends, and jump in.

Larry Swedroe rated real estate investing in this book: The Only Guide to Alternative Investments You'll Ever Need: The Good, the Flawed, the Bad, and the Ugly

https://www.amazon.com/Only-Guide-Alter ... B003NE61GC

Here's a discussion about Larry's book: viewtopic.php?p=23364#p23364
Last edited by hudson on Sun Mar 13, 2022 11:29 am, edited 1 time in total.
squirm
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Re: Why not Real Estate instead of Stocks?

Post by squirm »

Dusn wrote: Wed Sep 22, 2021 3:07 pm I hear about the 1% rule for real estate a lot. But in what parts of the country do people find single-family homes that can rent for 1% of the home value? I've never seen, rented or owned a single-family home that could be rented for 1% of the cost of the home. (I've only lived on the East coast of the US).

Is the 1% rule for multi-family rentals or apartment buildings?
It only works in some areas. In other areas it can work if you happen to buy the property on the cheap. I
invest4
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Re: Why not Real Estate instead of Stocks?

Post by invest4 »

Different strokes for different folks. My strong sense is real-estate is most often a part-time job (if you want to make money)...no thank you. Similarly, recency bias is strong and many people are attracted to what seems to be "easy money"...be it tech, crypto. real-estate, etc...
Uncle Morris
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Re: Why not Real Estate instead of Stocks?

Post by Uncle Morris »

squirm wrote: Sun Mar 13, 2022 10:40 am
Dusn wrote: Wed Sep 22, 2021 3:07 pm I hear about the 1% rule for real estate a lot. But in what parts of the country do people find single-family homes that can rent for 1% of the home value? I've never seen, rented or owned a single-family home that could be rented for 1% of the cost of the home. (I've only lived on the East coast of the US).

Is the 1% rule for multi-family rentals or apartment buildings?
It only works in some areas. In other areas it can work if you happen to buy the property on the cheap. I
In the small town where we used to live, you could find 1% houses last spring. But since then, prices have gone up. It may pay to wait till real estate calms down a bit.
tibbitts
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Re: Why not Real Estate instead of Stocks?

Post by tibbitts »

invest4 wrote: Sun Mar 13, 2022 11:33 am Different strokes for different folks. My strong sense is real-estate is most often a part-time job (if you want to make money)...no thank you. Similarly, recency bias is strong and many people are attracted to what seems to be "easy money"...be it tech, crypto. real-estate, etc...
Just owning the home I live in is a part-time job. It's been eleven months now that I've had OSB for windows - I'm sure renters would love that "feature."
invest4
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Re: Why not Real Estate instead of Stocks?

Post by invest4 »

tibbitts wrote: Sun Mar 13, 2022 1:15 pm
invest4 wrote: Sun Mar 13, 2022 11:33 am Different strokes for different folks. My strong sense is real-estate is most often a part-time job (if you want to make money)...no thank you. Similarly, recency bias is strong and many people are attracted to what seems to be "easy money"...be it tech, crypto. real-estate, etc...
Just owning the home I live in is a part-time job. It's been eleven months now that I've had OSB for windows - I'm sure renters would love that "feature."
Ha! Bummer.
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