Concern about future of real estate investing?

[Michinori Kaneko]

Hi BP,

I'm a new real estate investor in NY. I invest in properties in Indiana.  I closed on my first rental property last month, and currently fixing up the place to hopefully rent it out soon (should be advertising soon!). Exciting, yes! But some article I read (it was just talking about how rent income was not increasing as much as expenses) made me think of future of real estate investing, and wanted to hear your opinions and perspectives about future of real estate market.

Let's face it, we are taking advantage of people who can't purchase a home to make profit for ourselves.  Well, maybe some don't want to purchase, but jist of it is what I just said. Now imagine 10 years from now, or maybe 20 years... there will be robots replacing our tenants jobs... our tenants will have no job, no income, and can't afford rents, especially the ones that have lower income jobs that are easier to be replaced by robots.  There will be larger gaps between the wealthy vs poor, and the wealthy ones will be able to buy nice homes. at that point, we will not be able to rent our mid tier or lower end house, and no one will be buying it. Scary thought, isn't it? Maybe it'll take more than 20 years for that to happen? maybe i'm thinking about it too pessimistically.  I wanted to throw this topic out there to see what people think about.  Thanks for your inputs in advance!

[Paul Choi]

A couple of thoughts:

Landlords are not "are taking advantage of people who can't purchase a home to make profit"  Landlords provide a product/service that has demand.  Just like food, water, cars, gas, etc. etc.  Profit has to be made in order for those products and services to continually be offered, improved and consumed.  No profits, no products.  

This whole robots and AI taking over all the jobs is abit over blown.  Same sentiment was expressed during the industrial revolution or when computers took off or when internet exponentially expanded, etc.  Yes, jobs were lost but other jobs were created via adaptation and evolution.  Those that don't stay ahead of the curve will be left behind.

I'd be more concerned about the various factors playing into home ownership trends if your investment vehicle is SFH - such as home ownership among millennials, aging population, consumer and student debt, etc.  Where is the population going? East and West coasts and towards the southern states.  There are 2 Americas - this map is compelling as to where you should put your investment dollars for maximum growth.