How I see property
This moment of pandemics really help me change my view about important issues. I used to look at property as something really nice to have. Well guess what, I don’t see it the sameway anymore.
Think about it, a property is like a car, it depreciates. Every single year you got new leaks, the paint wears down, the tenant broke something etc. I heard somewhere that if you rent your property, the maintenance cost is around 10% of the revenue generated by the property. It’s before the agency cost to manage the reservations of your property (around 6%), the land taxes (a lot), the revenue taxes (way more), the insurance etc etc.
When people say that you can be rich by acquiring properties alone, that makes me laugh. I learned that people get rich by selling a product or a service. The service you sell in the property is a home. This depends on the location of your property, the attractivity of the place, the global situation etc. Look at SF today, everythings closed, everyone who has invested a highly inflated price in the 2019 for a property there, I can’t even imagine how they feel right now.
Property is highly leveraged, highly illiquid and highly risky in attractive places.
So I see today a property as a store of value like other asset classes (gold, silver, stocks, crypto). You got a business, this business generates profit, you want to store it somewhere but you’re not happy with the basic interest rate of the bank (around 0% today..), well then you can put some of your profit in properties (always diversify). But again, I don’t think that you can be rich by acquiring properties alone. There are exceptions (like Rich Dad) but he’s selling other things as well (property is just a by product for him). He sells seminars, books, games, videos. So the profit he gets by selling his products well he put it in gold, silver and properties. But again he didn’t get rich by getting properties! He sell things you and I buy! He’s providing a service that’s how he get rich!
So if you still think about getting a property because you think that doing so will make you rich. Please, think again and focus on your job (or if you don’t like your current job, make a reflection about what you love doing that can be useful for other people).
See ya.
