this post was submitted on 02 Oct 2023
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I've calculated if it would pay off to build a house with four units on a piece of land that I already have. It would barely pay for itself after 30 years but let's be honest, 30 years is when the first big renovations are in order. I'm not sure if the "landlords are rich leeches" - trope holds up outside expensive cities with inherited properties.
I think the main money maker isn't rent. It's owning (or at least having a mortgage on) property that doubles in value every ten years.
The rent often just pays for the mortgage and upkeep. The main payday comes when they sell it all off to the next parasite.
Real Estate long-term ROI - 4% per year
NASDAQ long-term ROI - 11% per year
It's about diversity, and the various tax advantages to owning the property/business/etc.
Good luck getting 11% a year in the stock market. I think your stats include the pandemic and I don't think we'll see increases like that again, at least we can't count on it.
11% has been a financial planning standard since time immemorial (ok, well, since after the great depression). If a hedge fund or other investment isn't hitting 11%, you should be in S&P or NDQ which flattens to 10% over time... or "only" 6-7% after adjusting for inflation.
The last 30 years are considered "below average". The market only grew 9.9%/year on average. Which apparently that 0.1% is a big deal for investors.
Here's a fairly good breakdown on SOFI. Obviously, we'll never know what the future holds, but 10% over time is the "bad return" that rich people talk about.