A Real Estate Analogy

[Daniel Carlyle]

A Real Real Estate Analogy

I am starting my real estate adventure and I am trying to draw a comparison from paper assets (stocks, bonds, notes, T-bills, crypto, etc.) with real estate.
For those who know a bit more than me (and i know this will vary by person) but what are corresponding "tech stocks" (AMZN, AAPL, NVDA, FB, GOOG, etc.) of real estate? Are there any other types of real estate that might represent value sector, energy, healthcare, etc. 

The reason for the comparison is for me to try and understand the sectors and different types of real estate (SFH, townhomes, apartments, duplexes, quadplexes, commercial, storage, single tenant NNN, etc.) in hopefully launch into a real estate sector I would like to pursue, learn more about and purchase, etc.

[Ziad Hamati]

That question will require an essay to answer every part of your question :) 

With stocks, you mostly gamble on appreciation. Keeping it short here. Dividends give you cash flow but usually very little.

With Real Estate, you make money 4 ways:

- Appreciation (forced vs natural). Forced is when you add value. Natural is your market appreciation.

- Tax Benefits: building deprecation, cost segregation, write offs etc..

- Principal debt paydown: tenant paying off your loan.

- Cash flow.

Once the above are all added up, your true Rate Return will by far exceed your returns with stocks.

Now regarding the different type of real estate, that depends on a lot of factors and mostly on your financial goals and where are you in life today. Each of these have pros and cons. 

[Daniel Carlyle]

agree over the long term real estate should outperform stocks. The barrier to entry (education, experience, money, connections) do seem to be quite a bit higher to get all of those above mentioned benefits in comparison to opening a brokerage account and purchasing stocks.

No essay needed. I was just trying to ask an engaging question for those who have knowledge and background in both. 
 

[Ziad Hamati]

I have some stocks and crypto just for the purpose of diversification. But most assets are in real estate.

I only own SFH. Hald of them are centrally located and running as short term rentals. I depend on cash flow, which is why actively manage all my rentals and decided to go that round to maximize cash flow.

[Daniel Carlyle]

I am between SFH long term, townhouse long term, and vacation rentals (SFH, townhome). All seem to be very different. I am learning a lot (books, speaking with realtors, bankers, etc.) and just need to pick a lane and get started.

Goal is cashflow of 30k/month, but again have to start somewhere. 

[Jonathan Greene]

There is no way or reason to do what you are doing. Real estate is tangible, unlike all of the other comparative metrics you talked about. You can't do value add to crypto or stocks. You can to any form of real estate. Towns can't uplift your crypto, but they can uplift your property.

By trying to create subjective comparisons to make some personal model will only leave you in analysis paralysis forever because it's a waste of time. You don't need acronyms for everything, you need to figure out what asset class is attractive to you and why.

[Daniel Carlyle]

the point was to make a comparison to make that jump if possible. does not seem to be comparable though 

[John Morgan]

@Daniel Carlyle

My goal was to be 50/50 with RE and stocks. I’m top heavy with tech (NVDA, AMZN, META and AAPL). I like RE because it’s a tangible asset and brings in tax free mailbox money. I’m doing well off both the SM and RE now. But if the stock market crashes, I still have the rental income coming in to live off.

[Daniel Carlyle]

I am between SFH long term, townhouse long term, and vacation rentals (SFH, townhome). All seem to be very different. I am learning a lot (books, speaking with realtors, bankers, etc.) and just need to pick a lane and get started.

Goal is cashflow of 30k/month, but again have to start somewhere. 

Im with you john. i have my stocks set but want to jump into real estate the next few years.