Steve D Valentine argues real estate beats crypto for building lasting wealth. Bitcoin crashed 66% from $60k to $20k, while Phoenix real estate gained 17% year-over-year. Real estate lets you buy a $300k property with $9k down, collect rent to cover the loan, and use 1031 exchanges to defer taxes on gains.
Questions this video answers
Peak ~$60,000 and later ~$20,000 (example cited as ~66% loss in less than a year).
An increase of 59% (then down ~7%), noted as ~17% year-over-year return on the real estate piece in the example.
About $9,000 down (speaker's example).
He uses a 20% tax rate on a $200,000 gain as an example, equaling $40,000 tax owed.
1031 exchange (defers tax consequence of selling a property when rolled into another).
Chapters
Crypto versus real estate. You know, I, I didn't make some great choices in crypto this past year, but what I did make good choices in is the homes that I bought. And so, you know, it's always interesting. Crypto versus real estate, everybody wants to try to time the market. So crypto, if you were into it in that 2020-2021, or you got into bitcoin really early on and you did really well. If you, it's about timing the market, right? Did you get out in time? Like when crypto went. When bitcoin went to 60 grand and now it's, I think at 20. The scary thing is, is like you lost 66% of your portfolio in less than a year. Now, real estate, on the other hand, this is, this is the interesting part. Real estate, on the other hand, we might be going down a little bit because the uncontrollable of the current administration and the interest rates. Sometimes I wonder if the current administration wants anybody to own a home right now because of what they're doing with interest rates. And so. But crypto lost that in less than a year. Now, when you look at real estate, the prices might be going down a little bit, but we had an increase of 59% in the Phoenix market and it's down maybe 7. But we still have a 17% year over year return on the real estate piece. And I still have a tangible asset. If bitcoin goes to zero, what do you have? You have nothing, right? Real estate, some people have PTSD of the 2008 market. Even though it went down, guess what? It came back full force. And like, I don't even know 20x100x of what it went down to in 2008. So I really believe in what real estate can provide and the other piece too, when you're really looking at the two different investments. If I want to own $300,000 worth of Bitcoin, I have to have $300,000 put into it, right? And if it goes down by 66%, I've lost $200,000 of my investment and I have $100,000 left. Now, real estate, I can go buy the same $300,000 asset, but I only have to put $9,000 of my own money into that asset to own it, and the bank will give me the rest. You, you can't do that with any stock, especially crypto. You can't go borrow money. And the other benefit to it is I can rent my asset out and somebody else will pay the mortgage off. Or the loan off on the property. So think about that when you're investing. And I see a lot of people doing this where they're constantly putting money into stocks, 401ks. These things drive you crazy. Cause they go up and down based on what's happening. Real estate, right? So maybe the rent goes up and down. The mortgage is consistent throughout that 30 years that you own it. Depending on the interest rate, you can always refinance it. Here's the other crazy thing. When you look at, like, bitcoin, since we're talking about that, let's say you made $200,000 on Bitcoin and you want to pull that money out. You pull that money out of bitcoin and it's a taxable event, right? So if it's whatever the tax gain is on that $200,000, let's say it's 20%, right? Well, the 20% gain is 40 grand that you're now going to lose. Because, I mean, in some cases, there are some cases where you can borrow against your portfolio without a tax consequence. But most people will pull that out of the market. They've got their $200,000. They pay $40,000 in taxes. Real estate is a little different because if I get a $200,000 gain and I want to pull $150,000 or $200,000 out of it, I still own the property, but I can pull the equity out without a tax consequence. So now I still have that money, and I can go put it into bitcoin if I want to. And guess what? The tenant is now paying for my bitcoin investment. That is the beauty of real estate. If you structure it, right, and you start looking at like, how do I get here and why would I do it? You know, because most people have this myth. Well, you know, with bitcoin or stocks, I don't have tenants, I don't have repairs. I don't have those things. Yeah, but you also don't have losses, right? In real estate, you look at things I always tell. Tell my clients and my investors that, well, if the tenant skips something, breaks, it's just a bad day in the stock market. It's no different than when bitcoin goes to, you know, $20,000 or $30,000 and you start losing and you start worrying, and how do I take it out? The real estate just stays consistent, right? The value doesn't really matter in real estate. Until you sell it, it's going to go up and down. The other part about real estate versus Stocks is that if I pull the stock out, I'm gonna get taxed, period. If I pull my profit out or I cash out, I'm gonna get taxed, period. Real estate, if I decide to sell that asset and move it, I can go into a 1031 exchange, which means that I can defer the tax consequence of selling a property and move it into something else. Now, I don't exactly know how it works with Bitcoin, but if I sell Bitcoin and put it into Ethereum, I, I'm pretty sure you're still going to have a profit and a tax consequence. Well, you can double check that. I'm not sure, to be honest with you, but. And I'm sure people smarter out there that know how that works. But I'm really focused on real estate. And what I do like to show people is just how to take their earned income and put it into long term assets so that they have to have some stability and they're not worried about it going up and down. All they're worried about is that if a tenant's in there paying the mortgage, that asset is going to produce a long term legacy generational wealth piece for your family. And it's a great piece to add to whatever investment strategy that you have. You know, I've got a lot of friends that make a lot of money and showing them that, hey, if we can take a little bit of money every quarter and buy a house, not put it into the stock market, we're going to take $60,000 and we're going to buy a $300,000 asset, somebody's going to rent it out. It may or may not cash flow, depending on where interest rates are, doesn't matter. What matters is is that somebody else is going to pay that $260,000 off. And you have these assets that if they increase. Think about this 2018, you know, actually have a friend that in 2015, I told him, hey, you're making 120 grand a month, I need 50 grand a quarter and we're going to buy 15 homes over the next two or three years. And he didn't listen. So what happens in 2020? 2021, the homes that I tried to get him to buy in 2015, just like the stock market, it's better to be there than to be good. Right? And so just like the stock market, if he would have bought those homes and leveraged, he would have had, he would have bought, let's say at the time, he would have bought $1.5 million worth of rental properties, about 100, $120,000 a piece. Then those homes went up 59% in a two year period of time from 2018 to 2021, his portfolio would have gone up like, I don't know, four, five million dollars worth of homes. Then he could have pulled the equity out of those homes and put them into other places while the homes are still being rented, still being paid. And now we've moved cash out of those properties into other investments. So the two best times to plant a tree are 20 years ago and now. So if you're thinking about buying real estate, you know, no matter what the rates are, no matter what the market's doing, it's always a good time to buy and it's always a good time to have a plan and a strategy. And that's what I do with my clients. I show them how to strategize and implement these real estate strategies into their long term plan so they can create generational wealth. And again, I'm not a crypto expert. I just think it's an interesting correlation between the two and, and a comparison as to what's better, what's worse, what works. And I think there's a combination. So if you're looking for more strategies, real estate strategies, click subscribe, follow me for some more. And we're going to keep going down this road.
