61–63 of 63 posts
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Seems to make sense, buy a house 3x your annual income, with 20% down you could get that in 7 years if you save away 8.5% per year. And you have a house at 29
Lol, houses for 3x your income? I take it you don't live in the Bay Area ;-)
It may also be that smart rich people have gotten over the cult of homeownership: https://www.ft.com/content/00bf5968-f518-11e2-b4f8-00144feab... or http://www.slate.com/blogs/moneybox/2013/07/29/political_eco... . Or search for the term "The cult of homeownership" for more. There are well-known possible positives to owning but the negatives are vast too, especially compared to investing in an ultra-low-fee index fun…
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I'd take 10 houses for $200k in the Midwest over one $2m house in the Bay Area. Appreciation is lower, but rents (as a percentage of cost) are much, much better. The shortfall in appreciation can easily be made up for in better rent yield.
Less desirable areas always have higher cap rates. Most investors are NOT looking to make money on the cap rate though. If you're seriously investing in real estate you're looking into development projects, re-zoning, etc. You're buying because you know the local government has a 10 year plan to revitalize that part of the city or some other strategic bet.
I don't think that's strictly accurate, there's something for every budget in real estate investment world, from buying a small condo to rent out to sovereign-fund-level buildouts like Las Vegas CityCenter or LA Metropolis.
It's like saying that someone interested in stock investing would not be buying a few shares here and there, but instead go the Warren Buffett way and acquire entire companies to get synergies across industries.
There are income-oriented investors and multifamily income funds who buy primarily for cap rates.