Poll: What’s the best way to invest in real estate?

What's the best way to invest in real estate?

  • local rentals (49%, 34 Votes)
  • remote rentals (6%, 4 Votes)
  • fix-and-flip (6%, 4 Votes)
  • buying stock in REITs (16%, 11 Votes)
  • other... (3%, 2 Votes)
  • Investing in real estate is a bad idea, never do it. (20%, 14 Votes)

Total Voters: 69

This poll was active 03.02.2014 through 03.08.2014

  

About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

15 comments:

  1. 1
    boater says:

    I’m surprised buying your own home isn’t listed. You may not agree its the best but it does have things to like about it.

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  2. 2
    The Tim says:

    RE: boater @ 1 – I agree, there is a lot to like about buying a home to live in… but it’s not an investment.

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  3. 3

    RE: The Tim @ 2 – I would agree that investment type returns shouldn’t be the primary reason for buying a house (unless maybe you’re paying cash), but I don’t see how buying a house is not an investment. It is an asset, you are pumping money into it, and hopefully it will have value when you sell it. If you pay off a house in 15 years, didn’t you invest in that house?

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  4. 4

    RE: The Tim @ 2

    Real Estate Purchases

    Don’t put burgers on the table….investments like CASH do.

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  5. 5
    Chris says:

    From Dictionary.com, an investment is something “invested in” and “invested” is:

    1. to put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value.

    That’s a pretty broad definition. In my opinion a house is an investment as a homeowner because it delivers potentially profitable returns in the form of shelter and long-term appreciation.

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  6. 6

    By Kary L. Krismer @ 3:

    RE: The Tim @ 2 – I would agree that investment type returns shouldn’t be the primary reason for buying a house (unless maybe you’re paying cash), but I don’t see how buying a house is not an investment. It is an asset, you are pumping money into it, and hopefully it will have value when you sell it. If you pay off a house in 15 years, didn’t you invest in that house?

    Sorta kinda. If you have money to invest, and you’re primary objective is to gain the largest return, buying a house to live in is highly unlikely to be the most profitable. That doesn’t mean it’s not a smart thing to do.
    I was shopping for a mattress a few years ago, and the mattress salesman told me ” It’s not just a purchase, it’s an investment.” Maybe in my health, but it’s hard to sell a used mattress a few years later at a profit. Your personal residence maybe you can, but you’re subsidizing the investment for a quality of life gain, you’re willing to get a smaller return on your investment in return for good schools, or walkability, or prestige.
    So sure, it’s an investment, but it’s more like people buy houses to live in because they want to, just like they’d be buying a mattress or some cocaine.

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  7. 7
    Erik says:

    The best way to invest in real estate is to wait until you can get a good deal and then buy low only to sell high later. At that point, you hopefully have enough cashola to invest in something else to generate more money. With some good luck, you can double your money in 3 years or so and get a good deal by paying mostly cash. If you have mountains of cash, you can buy a good deal since less people have a lot of cash in hand. Find a condo with litigation against it or maybe they owe lots of hoa dues you can pay for them in return for a good purchase price. Now you can repeat the cycle. Buy low and sell high repeatedly until you get tired.

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  8. 8
    boater says:

    Seriously is Erik someone’s middle schooler?

    Tim a personal home can be an investment. Many are not but if you buy and upgrade and flip it while living in it you’re just avoiding paying rent and shortening your commute time.

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  9. 9
    Erik says:

    RE: boater @ 8
    That makes no sense. Why are you talking about commute time? Do you know you still gotta pay the mortgage when you remodel? I don’t see a house as a good investment for the next ten years. I will take the money I made and invest it. It will be worth $2.5 million when I retire if I never add a cent to it. Then I can sit back and watch it grow until a really good deal comes along. Seems like a good plan to me.
    I am sure the computer people don’t like this because it doesn’t follow their plan to save 20%, then buy a house and hold it forever.

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  10. 10
    ChrisM says:

    RE: The Tim @ 2 – Having made such a provocative statement, can you then define the term “investment”?

    As I see it, if you take a conventional 30 year loan and aggressively pay it down, that is in fact an investment. (where “aggressively” can be defined as paying down the loan vs. buying other investment opportunities)

    Do you disagree?

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  11. 11

    By Ira Sacharoff @ 6:

    By Kary L. Krismer @ 3:
    RE: The Tim @ 2 – I would agree that investment type returns shouldn’t be the primary reason for buying a house (unless maybe you’re paying cash), but I don’t see how buying a house is not an investment. It is an asset, you are pumping money into it, and hopefully it will have value when you sell it. If you pay off a house in 15 years, didn’t you invest in that house?

    Sorta kinda. If you have money to invest, and you’re primary objective is to gain the largest return, buying a house to live in is highly unlikely to be the most profitable.

    It depends. If the rest of your investment activity consists of following Cramer’s advice, it might be your only profitable activity! ;-)

    One other aspect of this is real estate and debt are both hedges against inflation, and they work really well together (leverage).

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  12. 12

    If you live in it it is a liability. Why? Because it costs money every month to live there. So it isn’t an asset. RE: Kary L. Krismer @ 3 -

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  13. 13

    RE: Brodie Allred @ 12 – I’d suggest you invest in a dictionary. ;-)

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  14. 14
    boater says:

    Just curious where you all living for free? You have four choices as I see it. Live in your parents basement for free. Pay rent. Pay mortgage and taxes etc. Or do option 1 until you can buy a house free and clear and just pay taxes etc.

    So for most people its really just a question of rent or mortgage. Or put another way its pay your own mortgage or your landlords.

    The comment about commute time is related to buying a house to live in and flip. If you’re working on the home you live in as your job you don’t have to drive to work.

    Also real estate (including your home) is part of prudent asset allocation and diversification.

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  15. 15
    Jay says:

    “Two people who rented the West Buttermilk home of Aspen native Nancy Pfister killed her and now face charges of first-degree murder” http://www.aspendailynews.com/section/home/161454

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