Cliffs: leverage

https://www.news.com.au/finance/mone...4d2489d5c002de

Inb4: “jUsT iNbEsT tHe dIfFeREnCE bRo”

The calculations in the article are retarded, brb "150 yEaRs Of WeStPaC dAtA". You can imagine in a dream world that your ROI is 8.3% with rental & appreciation but in reality you get a couple of Commodore SS owning bogans in your rental and next thing you know they're doing target practice against the bedroom walls, smash all the furnishings and leave without paying.

Meanwhile, leverage-wise you can say the same about S&P where you put 20% in and leverage 80% to invest 5x the $$$, do fuk all and the compound interest does its job while you sit back and do nuffin.

Never heard of a rental property being hit with a margin call

Didn’t need an article to tell me that

The article says

"I’ve only included the growth return on property and excluded rental income, taxes, and borrowing costs to keep things simple. These are not insignificant, but you can see from the big gap between property and shares that there’s plenty of room to include these and still have property come out way in front."



A good rule of thumb for maintenance is 1%-2% of property value per year. A 500k property you'll average $5-10k per year in maintenance and upgrades.

Also, interest on the mortgage, 3% if you have a good mortgage, 5-6% APR if you're borrowing today.

A lot of your gains go out as PITI and maintenance for an average of 1-2% gain per year, not including inflation.

ITT: We have 100k lying around as a downpayment for a 500k property.

These days I actually don’t borrow money to buy property

Take a guess why

Which poor life choices

You’ll need to be more specific

I’ve made so many

Hmm, what are foreclosures?

Ah, another one of these threads.

Just lol.

Since you asked

A foreclosure happens when you stop repaying the debt

A margin call happens when they ask you to tip in more cash as a result of the underlying asset having devalued

Two completely different things

LMK if there’s anything else I can explain to you bby

They are no different in essence. In both instances, the borrower is facing financial duress and has to act quickly in order to maintain the underlying asset.

Many slumlordmaxxers are one saavy renter away from being margin called. Pony up cash out of pocket or lose the asset.

BTW this is extra cope for anyone who paid cash for a rental property in 2008 instead of putting money into equities. Even with rent payments, equities easily outperfomed.

OP-

I fully agree and am way more invested in RE than equities.

But leverage does work both ways. It's easy to lose $100k on a $50k initial investment if you time the RE market poorly.

The thing about RE vs shares is that with shares, I don’t have to do anything. Just click ‘buy’. Then focus on my job.

RE is a lot more work. I don’t want another job mane.

They have people who will take care of all that stuff for you

I'm primarily in the stock market. My GF is primarily in real estate.

When I compare the two. I think real estate is a better investment all around.
Real estate:
-Can effectively use leverage/debt to control a property that costs far more then you've invested.
-Can have tax advantages.
-Can provide cash-flow on a monthly basis.
-Can use the tenants money to pay for the mortgage, property tax, insurance and maintenance/upkeep.
-Typically more 'stable'.


Yes its easier to just click 'buy' on a brokerage account. Yes you don't need any more knowledge/skills then that. Yes the markets can perform extremely well in bull runs.

But does your dividend payment really benefit you in any way for the first 20-30 years of investing? If you don't hold anything that pays a dividend it really doesn't matter if you have a hundred dollars or a million dollars. If you ain't selling shares its irrelevant. In bear markets (like this one) your portfolio can take a massive hit. Dividends can get cut. Etc.

Even with a massive slump right now the rental properties are still providing cash flow every month. Even if the 'values' of those properties drop by 60% she's still in the green on them. (Long term holds.) Real estate is risky but you can also buy a stock that crashes and burns too.


Both can be risky. Both can be lucrative. Both are worth holding long term.

Neither one is a good investment while the Fed is tightening.

Only investing cliffs you ever need:

-Buy when the Fed is printing
-Sell when the Fed is tightening

Central bank cash injections are the only things that control prices any more.

Definitely the way to go, but realistically the route if you've made your money, and are looking for some safe place to park it. Otherwise, you can leverage and hit the markets making stupid money.


Yes, there can be more risk with investing in the markets, but if you aren't a complete mouth breathing retard, you have no excuse. Then when you've made enough and want a safe place to land....land/homes, and find ways to keep busy

Cash on Cash. And you get to capture rent increases.

Why invest in RE and wait for measly monthly payments when you can just yolo on 0DTE SPY calls and turn $10k into $280k overnight?

Right now, holding cash is the best investment.

Yeah that’s only devaluing at what, 20% a year?

Would you be buying more property now?

You're all wrong.

Leveraged ETFs are the way to go.

If I found the right block at the right price for sure