Real estate investing is not dead, and here’s why.

5 minute read

This isn’t a diss on AL Anany’s article “I Never Understood Why My Father-In-Law Invests More Than 75% Of His Assets In Real Estate.”

I do want to offer a different perspective.

As a disclaimer, I am a Millennial, I do invest a portion of my portfolio in real estate, I am real estate inclined in my investments, and I do plan to invest more both in real estate as well as other asset types.

If you’re like me, you roll your eyes at every time someone whispered “Rich Dad, Poor Dad” in my ear. I do think there are a couple gold nuggets of knowledge in there. One of which I half-agree with is Robert Kiyosaki’s comment that “your house is not an asset. Rather, it’s a liability.”

I say I half-agree because a house you live in can be both a liability and an asset. Bought a house and made a $200K profit? You’d high-five Kiyosaki. Drowning in mortgages? Maybe not so much.

But, there’s more to real estate than just buying your dream picket-fence crib or a couple of rental properties.

So, this is where I first find myself disagreeing with AL Anany’s stance.

Safe Investing

“[Real estate’s] not the best form of investment, and it’s not for everyone. They’re just trying to invest safely.”

Famous saying: “the only safe form of investing, is investing in yourself.” ❤

That crypto you’re drooling over? Super volatile. That stock you’re eyeing? Could plummet. But real estate? It’s tangible. Solid. You can touch it. Ever seen crypto evaporate? I have. It’s painful, like watching your favorite ice cream melt in the sun.

Fine, I agree that investing in real estate is not for everyone. Heck, I don’t think Bitcoin is for everyone. It is important to reflect on what is important to you and how investing can get you to the lifestyle you want. This could and could not involve real estate and as AL Anany put it, “this is absolutely okay”.

I don’t know anything about AL’s father or his properties so take this with a grain of salt. I would say his father should diversify a bit more if he has “75% of his assets in real estate”. But real estate has so many more benefits than investing in stocks or crypto, one of which is more resilience to market shifts. If you have all your properties in one market or sub-market, then that puts you at risk.

While we nervously eye our dwindling crypto wallet in this market, let’s not forget: your house, apartment, or that local retail mall will never hit rock bottom and be worth nothing.

The Big Billionaire Buzzkill

“Hey rich person, do you invest in real estate? They’ve all invested in real estate in one way or another. But it’s more of a luxury compared to a serious life-deciding investment. But if the end goal is similar to the above highly successful people, then real estate investment is not the way.”

Let’s take a step back and look at this list of big billionaire moguls and their lack of real estate focus. What do they have in common?

They all made it big in business.

Business is overwhelmingly the highest percentage of the wealthiest people’s net worth. It seems like the conclusion should be “I should start a business” rather than “looks like I should skip investing in real estate because Jeff Bezos and Elon Musk don’t focus on it while too busy taking over the world”.

Let’s get real here: you, me, and 99.99% of the world ain’t aiming for that billionaire badge. We’re just looking for the millionaire mark: a comfortable, financially independent lifestyle. And guess what? Those in the sweet $1M-$10M range? They invest in real estate.

When we look at the data, we see that people in the $1M and $10M net worth tier invest 10–20% of their net worth in real estate outside of their primary residence.

Conclusion: Seems like you should invest in real estate.

Changing Times: Is Real Estate Dead?

“Is this real-estate-loving mentality changing per generation? As far as their current behavior is showing, I believe investing in safe assets like gold and real estate will decline over the upcoming twenty years.”

We are flooded by those get rich off a risky bet stories of people making millions off intangible assets like crypto or NFTs that it dulls us to the fact that for every one of them, there are thousands of others who lost big with the same mindset.

Millennials and Gen-Z also face the constant bombardment of headlines on how our generation cannot not afford to buy a house because of crazy prices, student loans, stagnant wages, etc. It is draining and causes us to shy away from real estate all together.

Whether you want that white picket fence or to be a world traveler, there are other ways to get into real estate beyond that primary residence that still allow you to go on those “world tours”.

Do I think the nature of real estate investing will change? Yes.

The events from COVID and work from home movement has already shown that. If you think real estate investing is limited to buying a single-family home that you live in, then you are missing out on true real estate investing. Even if you want to live a different lifestyle than the nuclear family, does not mean real estate is dead or a bad investment.

If you were like me you may just be ignorant to the opportunities out there to invest in real estate without being tied down. If that’s the case, check out real estate syndication. It may be the opportunity for you to take advantage of all the benefits of real estate without the hassle. Allowing you to live that flexible lifestyle while still investing in real estate.

That’s my take on this.