Why not Real Estate instead of Stocks?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

Have you looked at www.biggerpockets.com ?
Last edited by abuss368 on Sat May 14, 2022 3:22 pm, edited 1 time in total.
John C. Bogle: “Simplicity is the master key to financial success."
Register44
Posts: 236
Joined: Sun Feb 09, 2020 11:30 am

Re: Why not Real Estate instead of Stocks?

Post by Register44 »

:arrow:
Last edited by Register44 on Mon Jan 11, 2021 7:35 pm, edited 1 time in total.
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

Register44 wrote: Thu Oct 22, 2020 10:58 pm
abuss368 wrote: Thu Oct 22, 2020 9:20 pm HAve you looked at www.biggerpockets.com ?
Biggerpockets = Real Estate good, stocks / bonds bad

Bogleheads = Stocks / bonds good, Real Estate Bad

World assets
200 Trillion in Real Estate
200 Trillion in Bonds
90 Trillion in Stocks

Maybe both forums are correct and we should split the difference?
It is hard to generalize. Stocks, bonds, real estate all have different risk characteristics. Investors should develop a strategy that works best for them.
John C. Bogle: “Simplicity is the master key to financial success."
Register44
Posts: 236
Joined: Sun Feb 09, 2020 11:30 am

Re: Why not Real Estate instead of Stocks?

Post by Register44 »

:arrow:
Last edited by Register44 on Mon Jan 11, 2021 7:35 pm, edited 1 time in total.
finite_difference
Posts: 3626
Joined: Thu Jul 09, 2015 7:00 pm

Re: Why not Real Estate instead of Stocks?

Post by finite_difference »

Register44 wrote: Fri Oct 23, 2020 11:15 am
abuss368 wrote: Thu Oct 22, 2020 11:01 pm
Register44 wrote: Thu Oct 22, 2020 10:58 pm
abuss368 wrote: Thu Oct 22, 2020 9:20 pm HAve you looked at www.biggerpockets.com ?
Biggerpockets = Real Estate good, stocks / bonds bad

Bogleheads = Stocks / bonds good, Real Estate Bad

World assets
200 Trillion in Real Estate
200 Trillion in Bonds
90 Trillion in Stocks

Maybe both forums are correct and we should split the difference?
It is hard to generalize. Stocks, bonds, real estate all have different risk characteristics. Investors should develop a strategy that works best for them.
Good point I agree. I was too harsh with the good / bad comparison. Let me try to rephrase it to indicate more of a preference continuum.

Biggerpockets = real estate > stocks / bonds

Bogleheads = stocks / bonds > real estate
I checked out Biggerpockets the other day, after a poster referenced it as a glowing argument for why everyone should be investing in RE. I stumbled across a thread on eviction, and those guys are ruthless.

I was also reading that low income housing is where you can make the most money.

For RE, at the end of the day, you take some responsibility for throwing people out on the street. Put another way, you probably can’t both be the most benevolent landlord and make the most money possible.

The stress of having to weigh all those decisions, which would seem to often fall in a morally gray zone where it’s hard to tell right from wrong, that strain is not zero for all individuals.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

Register44 wrote: Fri Oct 23, 2020 11:15 am
abuss368 wrote: Thu Oct 22, 2020 11:01 pm
Register44 wrote: Thu Oct 22, 2020 10:58 pm
abuss368 wrote: Thu Oct 22, 2020 9:20 pm HAve you looked at www.biggerpockets.com ?
Biggerpockets = Real Estate good, stocks / bonds bad

Bogleheads = Stocks / bonds good, Real Estate Bad

World assets
200 Trillion in Real Estate
200 Trillion in Bonds
90 Trillion in Stocks

Maybe both forums are correct and we should split the difference?
It is hard to generalize. Stocks, bonds, real estate all have different risk characteristics. Investors should develop a strategy that works best for them.
Good point I agree. I was too harsh with the good / bad comparison. Let me try to rephrase it to indicate more of a preference continuum.

Biggerpockets = real estate > stocks / bonds

Bogleheads = stocks / bonds > real estate
Well said! I have never owned real estate directly but have considered. I always invested in REITS.
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
unclescrooge
Posts: 6264
Joined: Thu Jun 07, 2012 7:00 pm

Re: Why not Real Estate instead of Stocks?

Post by unclescrooge »

Register44 wrote: Thu Oct 22, 2020 10:58 pm
abuss368 wrote: Thu Oct 22, 2020 9:20 pm HAve you looked at www.biggerpockets.com ?
Biggerpockets = Real Estate good, stocks / bonds bad

Bogleheads = Stocks / bonds good, Real Estate Bad

World assets
200 Trillion in Real Estate
200 Trillion in Bonds
90 Trillion in Stocks

Maybe both forums are correct and we should split the difference?
Where's the bonds are good/everything else bad forum?
:mrgreen:
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Why not Real Estate instead of Stocks?

Post by willthrill81 »

Register44 wrote: Thu Oct 22, 2020 10:58 pm
abuss368 wrote: Thu Oct 22, 2020 9:20 pm HAve you looked at www.biggerpockets.com ?
Biggerpockets = Real Estate good, stocks / bonds bad

Bogleheads = Stocks / bonds good, Real Estate Bad

World assets
200 Trillion in Real Estate
200 Trillion in Bonds
90 Trillion in Stocks

Maybe both forums are correct and we should split the difference?
I don't think that this forum is anti-real estate. It's just that some here paint real estate out to be the ultimate investment that's destined to always outperform stocks and with no risk and minimal effort, and some of us are quick to point out the flaws in that view. Many here hold stocks, bonds, and real estate.

As I noted early in this thread, the title should be "in addition to" rather than "instead of."
The Sensible Steward
User avatar
Rowan Oak
Posts: 851
Joined: Mon May 09, 2016 2:11 pm
Location: Yoknapatawpha

Re: Why not Real Estate instead of Stocks?

Post by Rowan Oak »

Register44 wrote: Thu Oct 22, 2020 10:58 pm
abuss368 wrote: Thu Oct 22, 2020 9:20 pm HAve you looked at www.biggerpockets.com ?
Biggerpockets = Real Estate good, stocks / bonds bad

Bogleheads = Stocks / bonds good, Real Estate Bad

World assets
200 Trillion in Real Estate
200 Trillion in Bonds
90 Trillion in Stocks

Maybe both forums are correct and we should split the difference?
I think BiggerPockets is a for profit business and is selling something. Nothing wrong with that, but clearly it is in their interest to promote real estate investing.

The Bogleheads Forum is independent and noncommercial.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger
flaccidsteele
Posts: 1339
Joined: Sun Jul 28, 2019 9:42 pm
Location: Canada

Re: Why not Real Estate instead of Stocks?

Post by flaccidsteele »

Rowan Oak wrote: Fri Oct 23, 2020 2:45 pm
Register44 wrote: Thu Oct 22, 2020 10:58 pm
abuss368 wrote: Thu Oct 22, 2020 9:20 pm HAve you looked at www.biggerpockets.com ?
Biggerpockets = Real Estate good, stocks / bonds bad

Bogleheads = Stocks / bonds good, Real Estate Bad

World assets
200 Trillion in Real Estate
200 Trillion in Bonds
90 Trillion in Stocks

Maybe both forums are correct and we should split the difference?
I think BiggerPockets is a for profit business and is selling something. Nothing wrong with that, but clearly it is in their interest to promote real estate investing.

The Bogleheads Forum is independent and noncommercial.
Quick OT question: do you monetize your (TWCI) content? If so, how long has that been? Thanks
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
bluegill
Posts: 351
Joined: Thu Oct 04, 2018 11:15 am

Re: Why not Real Estate instead of Stocks?

Post by bluegill »

My real estate investments return is very low, well, maybe around 0%. Also, I cannot eat appreciation.
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

bluegill wrote: Fri Oct 23, 2020 3:17 pm My real estate investments return is very low, well, maybe around 0%. Also, I cannot eat appreciation.
Why is that? High Leverage with low cash flows?
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

Look at REITs too.

Stock investors consider that real estate.

Real estate investors consider that stocks.
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
22twain
Posts: 4016
Joined: Thu May 10, 2012 5:42 pm

Re: Why not Real Estate instead of Stocks?

Post by 22twain »

tomtoms wrote: Thu Oct 22, 2020 9:27 am Why wouldn’t you want to put in some extra landlord work for that kind of return?
I'm retired, lazy and have enough money already.
Meet my pet, Peeve, who loves to convert non-acronyms into acronyms: FED, ROTH, CASH, IVY, ...
bluegill
Posts: 351
Joined: Thu Oct 04, 2018 11:15 am

Re: Why not Real Estate instead of Stocks?

Post by bluegill »

abuss368 wrote: Fri Oct 23, 2020 4:25 pm
bluegill wrote: Fri Oct 23, 2020 3:17 pm My real estate investments return is very low, well, maybe around 0%. Also, I cannot eat appreciation.
Why is that? High Leverage with low cash flows?
I have undeveloped land. generates no income. Undeveloped land does generates property taxes.

I also invest in Vanguard REIT Index Fund. It generates income.
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

bluegill wrote: Sat Oct 24, 2020 3:08 am
abuss368 wrote: Fri Oct 23, 2020 4:25 pm
bluegill wrote: Fri Oct 23, 2020 3:17 pm My real estate investments return is very low, well, maybe around 0%. Also, I cannot eat appreciation.
Why is that? High Leverage with low cash flows?
I have undeveloped land. generates no income. Undeveloped land does generates property taxes.

I also invest in Vanguard REIT Index Fund. It generates income.
Thank you that response. Is the undeveloped land a speculative bet that it will be in demand in the future?

The Vanguard REIT fund has been a very good fund over the long term.
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

bluegill wrote: Sat Oct 24, 2020 3:08 am
abuss368 wrote: Fri Oct 23, 2020 4:25 pm
bluegill wrote: Fri Oct 23, 2020 3:17 pm My real estate investments return is very low, well, maybe around 0%. Also, I cannot eat appreciation.
Why is that? High Leverage with low cash flows?
I have undeveloped land. generates no income. Undeveloped land does generates property taxes.

I also invest in Vanguard REIT Index Fund. It generates income.
As an alternative, if you like the cash flows from dividends, you may want to consider the Vanguard High Dividend Yield index fund and compare to the REIT fund. The yield is the same, it is taxed at the low 15%, and an investor avoids sector risk.
John C. Bogle: “Simplicity is the master key to financial success."
chillwill120
Posts: 113
Joined: Tue Oct 20, 2020 2:49 pm

Re: Why not Real Estate instead of Stocks?

Post by chillwill120 »

finite_difference wrote: Fri Oct 23, 2020 11:28 am
Register44 wrote: Fri Oct 23, 2020 11:15 am
abuss368 wrote: Thu Oct 22, 2020 11:01 pm
Register44 wrote: Thu Oct 22, 2020 10:58 pm
abuss368 wrote: Thu Oct 22, 2020 9:20 pm HAve you looked at www.biggerpockets.com ?
Biggerpockets = Real Estate good, stocks / bonds bad

Bogleheads = Stocks / bonds good, Real Estate Bad

World assets
200 Trillion in Real Estate
200 Trillion in Bonds
90 Trillion in Stocks

Maybe both forums are correct and we should split the difference?
It is hard to generalize. Stocks, bonds, real estate all have different risk characteristics. Investors should develop a strategy that works best for them.
Good point I agree. I was too harsh with the good / bad comparison. Let me try to rephrase it to indicate more of a preference continuum.

Biggerpockets = real estate > stocks / bonds

Bogleheads = stocks / bonds > real estate
I checked out Biggerpockets the other day, after a poster referenced it as a glowing argument for why everyone should be investing in RE. I stumbled across a thread on eviction, and those guys are ruthless.

I was also reading that low income housing is where you can make the most money.

For RE, at the end of the day, you take some responsibility for throwing people out on the street. Put another way, you probably can’t both be the most benevolent landlord and make the most money possible.

The stress of having to weigh all those decisions, which would seem to often fall in a morally gray zone where it’s hard to tell right from wrong, that strain is not zero for all individuals.
By owning index funds, you own ownership interest in a lot of companies, many of which are doing unethical things. It feels different because you are not the one actually doing the unethical things (versus actually being the person evicting someone), but either way, you are profiting and benefiting from suffering of others.
chillwill120
Posts: 113
Joined: Tue Oct 20, 2020 2:49 pm

Re: Why not Real Estate instead of Stocks?

Post by chillwill120 »

stoptothink wrote: Tue Oct 06, 2020 10:06 am
willthrill81 wrote: Mon Oct 05, 2020 7:54 pm A great many of the homes in our neighborhood are brand new or relatively new 3 and 4 bedroom homes with no more than about 2,200 sq. ft. The builder here must be able to make them profitably with no problem.
So annoying. We LOVE our area, but wife wants a SFH home (we own a 1480 sq. ft. townhome). We don't have any need or want for more square footage (with 2 kids), but it is literally impossible to find a relatively newer home (less than 30yrs old) in my area <2,500 sq. ft. Almost all of the newer builds in our area are >3,500 sq. ft. It isn't an affordability issue for us, we do not want a McMansion. This reason alone may end up keeping us in our townhome long-term (which I am perfectly fine with).
I've read so many posts on this forum where people talk as if newer homes are automatically better than older homes. Frankly I don't understand this thinking. Newer homes can be nice, but they can also be ugly and shoddily built. Older homes can be a wreck, but if well maintained they can have charm that newer homes don't have, and can also be sturdier than newer homes. My house was built in 1885 and from the basement you can see that the floor joists are super dense 3x8s versus the thin lumber used today and it has clearly withstood the test of time. I'm not arguing that old homes are better, I'm just saying that newer homes are not automatically better.
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

chillwill120 wrote: Sat Oct 24, 2020 9:13 am
finite_difference wrote: Fri Oct 23, 2020 11:28 am
Register44 wrote: Fri Oct 23, 2020 11:15 am
abuss368 wrote: Thu Oct 22, 2020 11:01 pm
Register44 wrote: Thu Oct 22, 2020 10:58 pm

Biggerpockets = Real Estate good, stocks / bonds bad

Bogleheads = Stocks / bonds good, Real Estate Bad

World assets
200 Trillion in Real Estate
200 Trillion in Bonds
90 Trillion in Stocks

Maybe both forums are correct and we should split the difference?
It is hard to generalize. Stocks, bonds, real estate all have different risk characteristics. Investors should develop a strategy that works best for them.
Good point I agree. I was too harsh with the good / bad comparison. Let me try to rephrase it to indicate more of a preference continuum.

Biggerpockets = real estate > stocks / bonds

Bogleheads = stocks / bonds > real estate
I checked out Biggerpockets the other day, after a poster referenced it as a glowing argument for why everyone should be investing in RE. I stumbled across a thread on eviction, and those guys are ruthless.

I was also reading that low income housing is where you can make the most money.

For RE, at the end of the day, you take some responsibility for throwing people out on the street. Put another way, you probably can’t both be the most benevolent landlord and make the most money possible.

The stress of having to weigh all those decisions, which would seem to often fall in a morally gray zone where it’s hard to tell right from wrong, that strain is not zero for all individuals.
By owning index funds, you own ownership interest in a lot of companies, many of which are doing unethical things. It feels different because you are not the one actually doing the unethical things (versus actually being the person evicting someone), but either way, you are profiting and benefiting from suffering of others.
The ESG funds across the investment spectrum have become quite popular in recent years. However, the WSJ has discussed at the length the biggest issues with ESG funds: that is what are the defined metrics fro including or excluding a fund from an index.
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

chillwill120 wrote: Sat Oct 24, 2020 9:21 am
I've read so many posts on this forum where people talk as if newer homes are automatically better than older homes. Frankly I don't understand this thinking. Newer homes can be nice, but they can also be ugly and shoddily built. Older homes can be a wreck, but if well maintained they can have charm that newer homes don't have, and can also be sturdier than newer homes. My house was built in 1885 and from the basement you can see that the floor joists are super dense 3x8s versus the thin lumber used today and it has clearly withstood the test of time. I'm not arguing that old homes are better, I'm just saying that newer homes are not automatically better.
Valid points for sure. The old saying “beauty is in the eye of the beholder”!
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
AerialWombat
Posts: 3102
Joined: Tue May 29, 2018 1:07 pm
Location: Cashtown, Cashylvania

Re: Why not Real Estate instead of Stocks?

Post by AerialWombat »

.....
Last edited by AerialWombat on Fri Apr 02, 2021 6:01 pm, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
User avatar
willthrill81
Posts: 32250
Joined: Thu Jan 26, 2017 2:17 pm
Location: USA
Contact:

Re: Why not Real Estate instead of Stocks?

Post by willthrill81 »

AerialWombat wrote: Sat Oct 24, 2020 9:50 am
willthrill81 wrote: Fri Oct 23, 2020 1:55 pm As I noted early in this thread, the title should be "in addition to" rather than "instead of."
Ding, ding, ding! We have a winner!

I love real estate. I also love being an entrepreneur. But I can’t wait for the day when I can sell both my companies and every stick of house and run away with the cash.
You should get some advice from tomtoms. If you ever want to get out of real estate, you must be doing something very wrong. :wink:
The Sensible Steward
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

I have friends of the family you had a HUGE rental business. Sold everything for index funds including REITS.

Retired early, no debt, and live from the dividends including REITs.

That proved to me from an early age that it works. Index funds and living from dividends.

Real life living breathing example right their in front of me!!! When my folks retired, they weee real life example #2!
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

I have friends of the family you had a HUGE rental business. Sold everything for index funds including REITS.

Retired early, no debt, and live from the dividends including REITs.

That proved to me from an early age that it works. Index funds and living from dividends.

Real life living breathing example right their in front of me!!! When my folks retired, they were real life example #2!
John C. Bogle: “Simplicity is the master key to financial success."
finite_difference
Posts: 3626
Joined: Thu Jul 09, 2015 7:00 pm

Re: Why not Real Estate instead of Stocks?

Post by finite_difference »

chillwill120 wrote: Sat Oct 24, 2020 9:13 am
finite_difference wrote: Fri Oct 23, 2020 11:28 am
Register44 wrote: Fri Oct 23, 2020 11:15 am
abuss368 wrote: Thu Oct 22, 2020 11:01 pm
Register44 wrote: Thu Oct 22, 2020 10:58 pm

Biggerpockets = Real Estate good, stocks / bonds bad

Bogleheads = Stocks / bonds good, Real Estate Bad

World assets
200 Trillion in Real Estate
200 Trillion in Bonds
90 Trillion in Stocks

Maybe both forums are correct and we should split the difference?
It is hard to generalize. Stocks, bonds, real estate all have different risk characteristics. Investors should develop a strategy that works best for them.
Good point I agree. I was too harsh with the good / bad comparison. Let me try to rephrase it to indicate more of a preference continuum.

Biggerpockets = real estate > stocks / bonds

Bogleheads = stocks / bonds > real estate
I checked out Biggerpockets the other day, after a poster referenced it as a glowing argument for why everyone should be investing in RE. I stumbled across a thread on eviction, and those guys are ruthless.

I was also reading that low income housing is where you can make the most money.

For RE, at the end of the day, you take some responsibility for throwing people out on the street. Put another way, you probably can’t both be the most benevolent landlord and make the most money possible.

The stress of having to weigh all those decisions, which would seem to often fall in a morally gray zone where it’s hard to tell right from wrong, that strain is not zero for all individuals.
By owning index funds, you own ownership interest in a lot of companies, many of which are doing unethical things. It feels different because you are not the one actually doing the unethical things (versus actually being the person evicting someone), but either way, you are profiting and benefiting from suffering of others.
I agree, but it’s different to be confronted with it directly. I think most of us when confronted, for example in direct RE investing, will let our feelings get in the way of profits. But the RE calculations assume you are going to be ruthlessly profiteering.

It’s a bit like going to the supermarket vs running a farm.

Also, public companies, due to their high profiles, will be pressured by their shareholders to become more ethical. No company wants to be viewed as unethical, which would be bad for business. Public companies also have the strictest requirements for financial reporting and following the law in order to allow an amateur investor like me to buy into them.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh
tibbitts
Posts: 23589
Joined: Tue Feb 27, 2007 5:50 pm

Re: Why not Real Estate instead of Stocks?

Post by tibbitts »

Bogleheads are just waiting for the right simple and low-cost opportunity to benefit from direct real estate ownership. Sort of like TIAA has but cheaper, and far more diversified (say 10k+ properties), without the geographic bias. Arguably the TIAA expenses aren't directly comparable to a mutual fund of course, so maybe not equity-index-fund-cheap, but probably closer than TIAA is now.
Register44
Posts: 236
Joined: Sun Feb 09, 2020 11:30 am

Re: Why not Real Estate instead of Stocks?

Post by Register44 »

:arrow:
Last edited by Register44 on Mon Jan 11, 2021 7:34 pm, edited 1 time in total.
tibbitts
Posts: 23589
Joined: Tue Feb 27, 2007 5:50 pm

Re: Why not Real Estate instead of Stocks?

Post by tibbitts »

Register44 wrote: Sat Oct 24, 2020 1:09 pm edit: I should have asked what are the TIAA funds, I have not heard of them.
Is it this https://www.tiaa.org/public/retire/fina ... te-account
Yes.
Register44
Posts: 236
Joined: Sun Feb 09, 2020 11:30 am

removed

Post by Register44 »

:arrow:
Last edited by Register44 on Mon Jan 11, 2021 7:34 pm, edited 1 time in total.
tibbitts
Posts: 23589
Joined: Tue Feb 27, 2007 5:50 pm

Re: Why not Real Estate instead of Stocks?

Post by tibbitts »

Register44 wrote: Sat Oct 24, 2020 1:47 pm
tibbitts wrote: Sat Oct 24, 2020 1:28 pm
Register44 wrote: Sat Oct 24, 2020 1:09 pm edit: I should have asked what are the TIAA funds, I have not heard of them.
Is it this https://www.tiaa.org/public/retire/fina ... te-account
Yes.
Thanks for sharing I had no idea about this. I just did a quick read on it. It would take some work to run the numbers, but its expense ratio could be really fair. We would need to see how much American Tower, Prologis, and others pay to their management. When we buy any stocks we know that some profits are lost due to CEO pay. It seems with TIAA its actually more transparent. We know it is always going to be just shy of .8% of the total value.

Going of an example let's say we have a house that is worth $500,000 and rents for $2,500. Just making up numbers. If we contracted a property manager at 10%. Then 2,500(.1)(12)= $3,000. $3,000 / $500,000 = .006 or .6%. So it would seem TIAA is actually pretty fair.

I would like to see what the true expense ratio on VNQ is when accounting for management fees from all of its individual components. Since VNQ sports a .12% on the top, that leaves just .78 - .12 = .66% in fees to account for. If most reits management comes in under that figure then reits win. But if higher TIAA wins.

Then it gets back to size and diversification as you pointed out as the major disadvantage to TIAA.
We've had some pretty enthusiastic debates about the expense ratio here; I come down on the side of it being pretty reasonable due to it including some management costs. However I'm less enthusiastic about TIAA moving to their "bi-coastal" strategy a few years ago, and I think at one point they were doing international and then weren't, and the number of properties (especially considering the bi-coastal thing) seems to be insufficiently diversified. I still own some of it but not a lot relative to what I used to own. Frankly that's partly due to my account that used to hold most of my Real Estate funds having access to the 3% fixed account, which has become somewhat the holy grail of investing. All the Real Estate I own now is in my other account where the only alternative is the 1% fixed account.
tibbitts
Posts: 23589
Joined: Tue Feb 27, 2007 5:50 pm

Re: Why not Real Estate instead of Stocks?

Post by tibbitts »

Register44 wrote: Sat Oct 24, 2020 2:03 pm
tibbitts wrote: Sat Oct 24, 2020 1:54 pm
We've had some pretty enthusiastic debates about the expense ratio here; I come down on the side of it being pretty reasonable due to it including some management costs. However I'm less enthusiastic about TIAA moving to their "bi-coastal" strategy a few years ago, and I think at one point they were doing international and then weren't, and the number of properties (especially considering the bi-coastal thing) seems to be insufficiently diversified. I still own some of it but not a lot relative to what I used to own. Frankly that's partly due to my account that used to hold most of my Real Estate funds having access to the 3% fixed account, which has become somewhat the holy grail of investing. All the Real Estate I own now is in my other account where the only alternative is the 1% fixed account.
Thanks for confirming the expense ratio. So it does seem like the main qualm is the strategy. That is a limitation of one fund. Similar to buying a single reit instead of VNQ. But I think we can agree TIAA is way better diversified than an individual that buys 1 or 2 rentals.

If I were interested in buying the TIAA fund do I have to setup an account directly with them. Does it have to be an IRA? Would it even make sense if it was not an IRA? Similar to the thinking with holding reits?
TIAA has so many contract rules I don't know if it is available to everyone; I think Traditional isn't, or wasn't, I don't keep track of everything they do. It used to be some options were only available to customers with a pre-existing employer relationship. So I would just call and ask them. In any case I'm guessing it's only available in tax-advantaged accounts. As far as I know it never pays distributions.
User avatar
AerialWombat
Posts: 3102
Joined: Tue May 29, 2018 1:07 pm
Location: Cashtown, Cashylvania

Re: Why not Real Estate instead of Stocks?

Post by AerialWombat »

.....
Last edited by AerialWombat on Fri Apr 02, 2021 6:00 pm, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

AerialWombat wrote: Sat Oct 24, 2020 2:10 pm
willthrill81 wrote: Sat Oct 24, 2020 10:33 am
AerialWombat wrote: Sat Oct 24, 2020 9:50 am
willthrill81 wrote: Fri Oct 23, 2020 1:55 pm As I noted early in this thread, the title should be "in addition to" rather than "instead of."
Ding, ding, ding! We have a winner!

I love real estate. I also love being an entrepreneur. But I can’t wait for the day when I can sell both my companies and every stick of house and run away with the cash.
You should get some advice from tomtoms. If you ever want to get out of real estate, you must be doing something very wrong. :wink:
LOL. "Hard pass."

Again, I love real estate. It's the thing that's making me wealthy. But it still creates stress, still incurs risk. I long for the day when I have enough equity to convert that equity into cash and bonds (NOT stocks). Life will be simpler and easier.
Is the real estate in your portfolio direct ownership, REITS, or private placement / crowdfunding?
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
AerialWombat
Posts: 3102
Joined: Tue May 29, 2018 1:07 pm
Location: Cashtown, Cashylvania

Re: Why not Real Estate instead of Stocks?

Post by AerialWombat »

.....
Last edited by AerialWombat on Fri Apr 02, 2021 11:37 am, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
User avatar
abuss368
Posts: 27850
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!
Contact:

Re: Why not Real Estate instead of Stocks?

Post by abuss368 »

AerialWombat wrote: Sat Oct 24, 2020 8:17 pm
abuss368 wrote: Sat Oct 24, 2020 5:13 pm Is the real estate in your portfolio direct ownership, REITS, or private placement / crowdfunding?
Direct ownership. I wouldn’t touch syndications with a 10m pole.
What about REITS? What don’t you like about syndications?
John C. Bogle: “Simplicity is the master key to financial success."
User avatar
AerialWombat
Posts: 3102
Joined: Tue May 29, 2018 1:07 pm
Location: Cashtown, Cashylvania

Re: Why not Real Estate instead of Stocks?

Post by AerialWombat »

.....
Last edited by AerialWombat on Fri Apr 02, 2021 11:37 am, edited 1 time in total.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
tomtoms
Posts: 341
Joined: Wed Mar 06, 2013 10:56 pm

Re: Why not Real Estate instead of Stocks?

Post by tomtoms »

Record high home prices. Congratulation to all the single family home landlords. Great return especially if you bought the house mainly with bank’s money.

https://www.npr.org/2020/11/19/93664297 ... g-shortage

What do you think will happen in 2021?
FinancesRFun
Posts: 4
Joined: Fri Dec 20, 2019 11:46 pm

Re: Why not Real Estate instead of Stocks?

Post by FinancesRFun »

I LOVE owning RE.
I bought my first house with a VA loan in 2009 (0$ down/ 132k sale price.) It's now paid off, and provides 1500/mo in rent, and has appreciated to 300k.
I bought my second house with a VA loan in 2013 ($0 down/235 sale price)...this was a bad purchase, but I have a tenant paying the mortgage ea month. Currently owe 193k on it, and it's worth about 340k...and I still positively cash flow about 300/moth on it.

In my area of the country, these homes...are appreciating 6-8% a year in value... They will eventually both be paid off and become passive cashflow.

Buying RE as an investment? Not sure I love it. Moving out your primary residence and keeping it as a rental and letting a tenant pay it off for you over 15-30 years??? AWESOME.

My houses make up about 50-60% of my net worth...not counting cashflow. It's worked out great for me.

My biggest concern is what happened in this pandemic...delaying rent/tenant rights etc.

But if you budget for missed rents/vacancies and can afford to float the homes, it's a great passive way to build wealth in addition to the stock market.
User avatar
Kandinsky
Posts: 77
Joined: Thu Aug 05, 2021 2:20 pm
Location: United States

Re: Why not Real Estate instead of Stocks?

Post by Kandinsky »

000 wrote: Mon Oct 05, 2020 8:04 pm Today's generation is lucky to afford rent in a clean, safe place.
Maybe you don't realize what life is like for most (young) people in America today.
As an American millennial, I disagree with this sentiment. Disadvantaged situations are always amplified more than the norm when talking about any given scenario. I think it really comes down to life choices.

I worked a retail job part time to pay my way through state college (~$7K tuition per year) to get a degree in engineering, I live in a home I paid off at age 32 (brick ranch built in the 70's and purchased for $159K), and maximize my contributions to 401K, HSA, and IRAs. There is nothing magical or difficult about what I did and I bootstrapped my education by working retail.

One big mistake American's make is they tend to fetishize colleges like name brands. Kids fall in love with a specific school regardless of the price tag. Then they graduate with hefty loans and starting life already in the hole. They did it to themselves by the school they selected and potentially worse if they also happened to choose a degree having a low job demand outlook (think philosophy, liberal arts, etc.).

As an example, I worked with a guy at my last job that has the same engineering degree as me but he went to a school that cost probably 2x-3x what my school charged. I know for a fact I was making at least 30% more than him. The point is - when it comes time for kids to choose the school and degree, the decision should be firmly rooted in ROI.
stoptothink
Posts: 15368
Joined: Fri Dec 31, 2010 8:53 am

Re: Why not Real Estate instead of Stocks?

Post by stoptothink »

Kandinsky wrote: Sun Sep 19, 2021 4:41 pm
000 wrote: Mon Oct 05, 2020 8:04 pm Today's generation is lucky to afford rent in a clean, safe place.
Maybe you don't realize what life is like for most (young) people in America today.
As an American millennial, I disagree with this sentiment. Disadvantaged situations are always amplified more than the norm when talking about any given scenario. I think it really comes down to life choices.

I worked a retail job part time to pay my way through state college (~$7K tuition per year) to get a degree in engineering, I live in a home I paid off at age 32 (brick ranch built in the 70's and purchased for $159K), and maximize my contributions to 401K, HSA, and IRAs. There is nothing magical or difficult about what I did and I bootstrapped my education by working retail.

One big mistake American's make is they tend to fetishize colleges like name brands. Kids fall in love with a specific school regardless of the price tag. Then they graduate with hefty loans and starting life already in the hole. They did it to themselves by the school they selected and potentially worse if they also happened to choose a degree having a low job demand outlook (think philosophy, liberal arts, etc.).

As an example, I worked with a guy at my last job that has the same engineering degree as me but he went to a school that cost probably 2x-3x what my school charged. I know for a fact I was making at least 30% more than him. The point is - when it comes time for kids to choose the school and degree, the decision should be firmly rooted in ROI.
Completely agree, and not only am I an American millennial, but one that is a 1st generation citizen and checks pretty much every box in the "victim checklist" (minority, single parent household, birth father in jail, inner-city, born with a neurodevelopmental disability....). I'm pretty much convinced that it is no harder today (in general) than it ever has been for the majority of young adults to "make it", but it is much more socially acceptable (almost praised) to say it is.
User avatar
Kandinsky
Posts: 77
Joined: Thu Aug 05, 2021 2:20 pm
Location: United States

Re: Why not Real Estate instead of Stocks?

Post by Kandinsky »

stoptothink wrote: Sun Sep 19, 2021 5:10 pm Completely agree, and not only am I an American millennial, but one that is a 1st generation citizen and checks pretty much every box in the "victim checklist" (minority, single parent household, birth father in jail, inner-city, born with a neurodevelopmental disability....). I'm pretty much convinced that it is no harder today (in general) than it ever has been for the majority of young adults to "make it", but it is much more socially acceptable (almost praised) to say it is.
Congrats! It's crazy how my coworkers would berate me and pick at me to try to figure out if there was an angle to how I managed to do it on my own. They talked to me and looked at me like I was not normal... Based on what most people do I guess that is understandable. It was the strangest feeling.
000
Posts: 8211
Joined: Thu Jul 23, 2020 12:04 am

Re: Why not Real Estate instead of Stocks?

Post by 000 »

Kandinsky wrote: Sun Sep 19, 2021 4:41 pm As an American millennial, I disagree with this sentiment. Disadvantaged situations are always amplified more than the norm when talking about any given scenario. I think it really comes down to life choices.

I worked a retail job part time to pay my way through state college (~$7K tuition per year) to get a degree in engineering, I live in a home I paid off at age 32 (brick ranch built in the 70's and purchased for $159K), and maximize my contributions to 401K, HSA, and IRAs. There is nothing magical or difficult about what I did and I bootstrapped my education by working retail.

One big mistake American's make is they tend to fetishize colleges like name brands. Kids fall in love with a specific school regardless of the price tag. Then they graduate with hefty loans and starting life already in the hole. They did it to themselves by the school they selected and potentially worse if they also happened to choose a degree having a low job demand outlook (think philosophy, liberal arts, etc.).

As an example, I worked with a guy at my last job that has the same engineering degree as me but he went to a school that cost probably 2x-3x what my school charged. I know for a fact I was making at least 30% more than him. The point is - when it comes time for kids to choose the school and degree, the decision should be firmly rooted in ROI.
Congrats on your life choices.
Fat Tails
Posts: 516
Joined: Wed Oct 30, 2019 12:47 am
Location: New Mexico

Re: Why not Real Estate instead of Stocks?

Post by Fat Tails »

JustinR wrote: Sat Oct 03, 2020 9:32 pm Investing has the same returns as real estate for -523,370.27% the amount of work.
This. Being a landlord is a job, and not always (or ever?) a pleasant one. Investing in stocks requires little effort.
“Doing well with money has little to do with how smart you are and a lot to do with how you behave.” - Morgan Housel
User avatar
AnnetteLouisan
Posts: 7239
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: Why not Real Estate instead of Stocks?

Post by AnnetteLouisan »

flaccidsteele wrote: Sun Oct 04, 2020 7:35 am
JustinR wrote: Sun Oct 04, 2020 7:33 am
flaccidsteele wrote: Sun Oct 04, 2020 7:24 am
Brianmcg321 wrote: Sun Oct 04, 2020 6:50 am I already have a full time job.
My rentals ensure that I don’t need one

Note all the people invested in the stock market who still need to trade their Life for money at a job until they’re 55+ years old and beyond
That's...just not true at all.

Have you heard of FIRE? The entire idea is retiring early by investing in index funds.

Stocks offer similar returns to real estate investing for -523,370.27% the amount of work.
What work?

I don’t even live in the same country as my rental real estate. I couldn’t do work on them even if I wanted too

What’s the % of employees who FIRE? Statistically no different than 0

I FIRE’d and that’s because of real estate. Nothing says FIRE requires investing in the stock market
So do you use property managers?
broncocountry25
Posts: 350
Joined: Thu May 18, 2017 11:49 am

Re: Why not Real Estate instead of Stocks?

Post by broncocountry25 »

I think RE is not necessary to reach the goals of many Bogleheads. If you are young and willing to take on extra risk/work/leverage I think it can accelerate your journey. It certainly has for us...

The stocks are the long term plan for retirement for us and the RE is for cash flow and short term benefits. It will also bridge the gap for early retirement if we decide we want to pull the plug on work.

Also too many stories of success in real estate to discredit it so quickly, those successful stories are not going to come through on a stock focused internet forum. If you are serious about investing in RE meet local investors in person not on internet forums. RE is a relationship business to find the good deals not simply buying VTSAX and debating international exposure while you wait for time to pass (passive). Like most things in life the more you understand the better you can position yourself.

Locking in 30 year fixed rate debt and getting cashflow, appreciation, depreciation (tax write offs), debt paydown, and diversification. This is why we invest in real estate.
Hannibal Barca
Posts: 145
Joined: Sun Apr 11, 2021 12:22 pm

Re: Why not Real Estate instead of Stocks?

Post by Hannibal Barca »

I find the goldilocks real estate opportunities often quoted on this forum have been hard to find in the last 18 months (at least in my area).

Another issue I have with real estate is even if the IRR is high, the portfolio return is less attractive than first meets the eye. A real estate property's rent cash flow will need to be funneled into some lower yielding asset, or held in cash until you accumulate enough to buy another property.
broncocountry25
Posts: 350
Joined: Thu May 18, 2017 11:49 am

Re: Why not Real Estate instead of Stocks?

Post by broncocountry25 »

Hannibal Barca wrote: Tue Sep 21, 2021 11:34 am I find the goldilocks real estate opportunities often quoted on this forum have been hard to find in the last 18 months (at least in my area).

Another issue I have with real estate is even if the IRR is high, the portfolio return is less attractive than first meets the eye. A real estate property's rent cash flow will need to be funneled into some lower yielding asset, or held in cash until you accumulate enough to buy another property.
Or you can take the cash flow and invest it directly into VTI and let it build until you are ready/want to buy another property...
Hannibal Barca
Posts: 145
Joined: Sun Apr 11, 2021 12:22 pm

Re: Why not Real Estate instead of Stocks?

Post by Hannibal Barca »

broncocountry25 wrote: Tue Sep 21, 2021 11:51 am
Hannibal Barca wrote: Tue Sep 21, 2021 11:34 am I find the goldilocks real estate opportunities often quoted on this forum have been hard to find in the last 18 months (at least in my area).

Another issue I have with real estate is even if the IRR is high, the portfolio return is less attractive than first meets the eye. A real estate property's rent cash flow will need to be funneled into some lower yielding asset, or held in cash until you accumulate enough to buy another property.
Or you can take the cash flow and invest it directly into VTI and let it build until you are ready/want to buy another property...
That's one option. But the market could fall at the same time that you find an attractive real estate property (prices tend to be correlated, even across asset classes). And even if VTI just straight returned 9% every year, the blended return of your for example 15% return investment property and 9% VTI is going to be somewhere in between. Good returns yes, but not as close to the 15% a lot of folks seem to have in their heads.
User avatar
Kickstart1967
Posts: 39
Joined: Sat Sep 11, 2021 10:48 am
Location: Cheshire, UK

Re: Why not Real Estate instead of Stocks?

Post by Kickstart1967 »

I can tell you my experience in this market. We started buying property in 1999 when I just started to make decent money and at one stage had 20 rentals. My DW and I are both prepared to do lots of work ourselves (strangely I actually enjoy manual labour) and there certainly is not a week that goes past when we don't have to do something to one or other property or deal with admin.

I have tried property managers but they just seem to pass on any complaints from the tenants and only seem able to find the most expensive workmen to fix things and financially it was not worth it for us. Once you have tiled one bathroom then the second one is a breeze.

From 99 - 05 we were buying in good arears with a gross yield of between 6% - 10% and we have ploughed all the rental payments back in to pay off the mortgages. On average the properties have gone up about 2.5 times in say 20 years and in the last couple of years we have sold a couple of properties.
If you can still get a yield twice what the mortgage interest payment will be then it should be a safe bet for you although do expect some bumps along the road. Even in a good area we have had to evict two tenants, found one marijuana "mini factory" in a basement of one property and had another lady tenant who was working from home in the more traditional sense of the word.

For us, all this hassle and hard work has been worth it although at age 55 we are now planning to start to offload perhaps half of the portfolio.

Good luck
Post Reply