why I don’t talk about real estate investing

Alternative income is a preoccupation of anyone who wants financial freedom – that and saving money. I talk about my ideas for wealth creation on this blog with a great deal of frequency. Part of that is just because that’s what blogs are – a conversation that swirls around particular topics – but part of that is just that I enjoy thinking about wealth creation. I am not terribly good at wealth creation. I am not a multimillionaire or financially free. I am not all that bad at wealth creation, either. Bubelah and I have worked hard to create a financial “kingdom” that keeps costs low, quality of life moderate but pleasant and future growth high.

But one thing you don’t hear me talking about much is investing in real estate. I have three good reasons I don’t like discussing real estate as an investment:

1. I hate the concept of “investing” in a primary residence. Your home is not an investment. It is a HOME, first, second and last. If you make some money on it, fine. If you are one of those people who live in it for two years, fix it up and sell it, fine, although I wonder how long anyone with a family could do that. You can’t buy a home with the same emotionless detachment that you might buy shares of GE. You don’t have to live inside GE, or clean its showers, or paint its walls, or have your kids go to its schools.

2. I don’t know much about real estate, let alone real estate as an “investment”. I have bought exactly one house in my life. I have never sold a house. Like everyone else, Bubelah and I went through a brief breathless hunt for “investment properties” a few years ago and came up empty (fortunately, considering the state of the market now). I read a couple of books, but much like my advice to the Writer’s Coin about financials I’m not foolish enough to think that made me an expert. It did make me enough of an expert to realize that….

3. …in the area where I live the real estate market is brutally competitive. It is expensive – down payments in the NYC area can be more than the entire cost of a house in other parts of America. Zoning and property tax laws are incredibly complicated. Competition is fierce. Gentrification can come out of nowhere. I am sure investing in a medium-sized city like St. Louis, for example, is complicated too but I suspect the rate of flux in the market is somewhat less than in New York.

For these three reasons I’ve tried to stay away from giving much advice on real estate investing as an alternative investment on brip blap. I plan to invest in real estate one day. I would like to own a place I could rent out. I’d like to flip a place. Bubelah and I bought a new construction townhouse and I’ve been through a million little upgrade projects – painting, installing stuff, even putting in crown molding. I know enough to “brighten up a place.” But all of these are future plans, and between now and then I need to put a lot of time into study – something that apparently a lot of people didn’t do over the last few years. I am working hard now at my consulting. Weekends tend to be spent doing “family stuff.” When I am financially independent I do plan on working real estate into my investing portfolio, but for now it’s not in the cards.

(photo credit: elvissa – look at it closely, it tells you everything you need to know about the screwy real estate market)

Odds and ends

  • I’ve updated the picture on one of my most popular posts – 101 thoughts on losing 100 pounds. If you’re curious to see the man behind the mask – so to speak – here’s your chance. When you look at the ‘before’ picture, keep in mind that black is slimming…