Why Real Estate Is A Terrible First Investment (For Most People)

Today we're going to talk about if real estate is actually a good investment. But before we do, don't forget, don't forget, if you want to grow faster from a business and a personal standpoint, uh, well, you subscribe. That's what you do, whatever platform you are coming from. So this has been talked about a lot. Like when I was growing up, my mom was like, you know, the important thing is, you know, you go to college, you get a degree and you get a home, you get married and you have children. Like that's the funnel that most people have, right? I'd say like, 99% of all people in the world, that's the funnel. That's kind of the lesson that you bake into your kids. Everyone has this goal, like, you know, growing up in high school and college, it's like, yeah, you know, I have to get a home. Like, that's the goal. I got to get a home. I got to get a home. And eventually I got a home. And like, what happens with the home? Like, your parents don't tell you why you should be getting a home, right? And so what ended up happening was I actually sold that home and now my mom complains to me all the time. So I rent now. I'm a very happy renter. And, you know, my mom complains, you should have your own home. You shouldn't be throwing away your money. That's wasting money. That's burning money. You know, we're going to talk about why there's a problem with that. And I might even send this video to you, mom, to watch it afterwards. Okay? Because sometimes you just don't hear me when we are eating Chinese buffet. All right? So, you know, people say, okay, you're, you're, you're investing in real estate, you're investing in real estate. But like, no, because if you're buying a home for 99% of people, or we'll say 95% of people, what ends up happening is, You put— you live in the home. That means the home doesn't cash flow. So by definition, what are you investing in? Are you investing in the appreciation for when you sell it like, I don't know, 5, 10, 15 years later? If you're investing and you're actually living in it, that is not an investment. Okay? If you are buying multiple units, that's a different story. You're cash flowing, right? But most people aren't doing that. Now the second thing is this: managing real estate is a pain in the butt. Something breaks, Well, guess what? You have to deal with it. Let's say you live in like a townhome, you're gonna have to deal with it. And then, you know, you have HOA, so you have all these additional hidden costs that tie in with it. To me, for as a guy that really appreciates convenience, that to me is a pain in the butt. So I try to avoid as many pain in the butt scenarios as I can, right? If you're actually living in it, guess what happens? You are actually tied up to one spot. You cannot maneuver around. If you are younger and let's say you're not married, you don't have children yet, You want to have the freedom, right? The freedom is the beautiful piece. If you want to move somewhere else, you do it. If you end up being tied to this one home for— you're stuck with it. You have like a, uh, I don't know, like a 30-year lease or not a lease, 30-year loan. Guess what? You're stuck with it. That changes a lot of decisions that you make. Instead of saying, oh, you found this other opportunity, you were living in LA and you found this other opportunity to live in, uh, go do something amazing in Singapore or in San Francisco or in New York. You can't do that because you're not— you're now tied to that area. And you have this, you basically made the decision that you are going to, what, you're going to settle in and you're going to be tied down to that one spot and you are going to maybe have a family there and just, you know, that's it. There's a time and a place for that. But if you're younger, this scenario is, well, maybe you shouldn't do that, right? Here is the other thing about real estate too. You can get a better return in other areas. Let's say if you're doing like an index fund, okay, index funds, you know, have been pretty good. Index funds like investing in the S&P 500, The returns on that have been generally pretty good, maybe around 10% or so, especially in this bull market. Um, last, I don't know, what is it, 13 years or so? In real estate, you don't really know what you're going to get. Like if you're, if you're cash flowing, you might be getting, you know, uh, I don't know, 7, 8, maybe even 10% a year, right? But if you are living in it, you're not cash flowing on it, right? So that's a tough thing too. If you're watching this or if you're listening to this right now and you're probably interested in marketing, you're probably interested in business. What's to say you can't do a better job, uh, having your own thing where you have a better return than that in business where you have the most control? If you screw up any, that's on you. Hey, you have the most control. If you screw up, that's on you. So it's kind of a nice validator, but what's to say you can't be getting, you know, a higher return, like maybe 12 or 15% higher than that, right? You know, some of the people that own the most real estate in the world, like, uh, let's look at Grant Cardone. He has a lot of real estate, right? He has, I think, over $400 million in real estate. He rents, he owns all these different apartment complexes or multifamily units and he rents those out, those cash flow. And in return he gets to, you know, do it, he reinvests it back into business and then he continues to deploy and the pie continues to get bigger and bigger. Now he constantly moves around, right? I remember at one period of time he was in Malibu and then he would move somewhere else and then he just moved to these amazing spots. Where, um, you know, the landlord or whoever owns it would just kind of take care of everything for him. And, um, the flexibility is amazing. He has kids, he has a wife, he flies around everywhere, but that's what works out for him. You know, when you, when you put money into real estate, let's say you want to buy a home for, I don't know, $500,000, right? In US dollars. And you put 20% down, you put $100,000 down. What's to say you couldn't have done better with that $100,000? You could have redeployed that money into somewhere else, into some other investments, maybe investing in yourself. So the important thing again is you are, you're cash flowing on your own investments and then you're taking that in any, any profits that you have and you're reinvesting it and the pie is getting bigger and bigger and bigger and bigger. And most important thing with business is, is, or one of the most important things is you don't want to lose the time. The time that you lose, you're never gonna get it back, right? Whereas if you buy a home, you are stuck with it for— what are you getting from it? You're not getting better. You're not, your business isn't getting bigger. You're, you're just paying money to it. So to me, That you're throwing away money. Sure, you're paying down the equity of your home. Fantastic, right? But then you go to your job and you complain about how much you hate your boss and you complain about what you do and how you— and you cry about it. And then you come home and then you end up watching Netflix and that's the rest of your life. Before you know it, boom, you're married, you have this home and you have kids, you have a pet. And then, okay, that's the rest of your life, right? That's fine if that's what you want. But what's not fine is if you complain about it and if you have a problem, that's when it's like you didn't do what you could have done Um, and you fell into this trap of this whole like, oh, real estate is the best investment. It's not always the best investment. People have different circumstances. I'm just saying, you know, this is kind of what I learned from my circumstances. It's not always the best thing. And if you can, if you can invest in yourself, you can get better and invest more money into, into, um, something where you think you're confident in, where you can control it, like your business for example, or even, um, or, or even equities. Then you do that, you do that instead because that cash flows. Again, what people fall into the trap of because it's so, it's such a big topic. is it's like, yes, real estate is the best investment. Pour money into it, boom, you put a big down payment in, boom, you're stuck. And all of a sudden it's like, yep, that's it. That's your life. And you complain about it. Okay. It's okay if that's what you're— if that's what you're aiming for, if that's your goal, there's nothing wrong with that. But what's wrong is again, if you complain with it. All right, let me know what you think in the comments. Do you think I'm wrong? Do you think real estate is actually the best investment? Do you think there's other alternative sources of investment too? Let me know in the comments. And if you're coming from YouTube, don't forget to check out the next video over there. And don't forget to check out, or don't forget to rate, review, and subscribe because it helps us grow. And we'll see you tomorrow.