I would largely agree. For most people over the long term stocks are a better investment than real estate. I was just trying to make a point about commercial vs residential property.
How are your assets diversified? What’s the best ratios?
- Thread starter bubs
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Commercial property loans are more expensive than residential. The terms are often not longer than 10 year old. The rates are much higher and even taxes on property acquisition and mantaining them are also more expensive.
Even if you buy a residencial property through a company the loan will be more expensive.
I had a lunch probably 10 years ago with my banker and his boss. And they kept pushing for me to create a company. I didnt see any advantage.
But the biggest drawback on commercial property is tenants are business savvy. And will have lawyers on retainer. Which makes any interaction more complex.
I believe commercial property is for professional managers. Residential anyone can do it. Residencial its more a hands on approach. The right tenant is key. Its more intuitu personae.
Major property companies do commercial. But some of them started to do residential recently.
The vacancy on commercial is also sometimes related to eviction procedures. Bankrupcies but mostly not writting the actual value on books.
A lot of hotel managements are outsourced. When I thought about opening the fund. The management company sent me one hotel for sale for 13,5M which was rented to an hotel company. Which did all the management and paid a rent.
Even without the fund I couldve easily entered the hotel business. But it would mean again a lot of headaches. And missing time from my kids. Even now I feel this refurhishment is taking too much time from me. And it’s affecting kids. Last wednesday my oldest had lunch at school. I only arrived at 15h00. Which really sucked.
Once I met an old indian family which owned a lot of hotels. And the boss of that family told me the best income comes from 3 star hotels. They owned and managed the hotels and his office was located in their 3 star hotel. Even though they had 4 and 5 star joints.
Recently was in a lunch with a dutch dude. He wants to expand his 5 star boutique hotel. Because for embassies, governments etc they need a larger number of rooms. And he was buying buildings around. And was looking for a french partner. cause he wanted to create michellin star restaurant. I sent the info to some people. But didn’t follow through. I don’t care.
One detail did stick with me the guy wanted to increase the capital of the company with a new partner instead of selling shares cause like this he wouldnt have capital gains tax. This dutch cunts always have tax tricks.
Anyway for me residential property is the best asset in the world cause of cheap leverage. I don’t have any credits at the moment. But I’m feeling the itch again. Specially in south of France. I need a place to spend vacations. And something near the border of Italy would be nice. I have house in north but the water is unbearable.
My 2 cents.
Even if you buy a residencial property through a company the loan will be more expensive.
I had a lunch probably 10 years ago with my banker and his boss. And they kept pushing for me to create a company. I didnt see any advantage.
But the biggest drawback on commercial property is tenants are business savvy. And will have lawyers on retainer. Which makes any interaction more complex.
I believe commercial property is for professional managers. Residential anyone can do it. Residencial its more a hands on approach. The right tenant is key. Its more intuitu personae.
Major property companies do commercial. But some of them started to do residential recently.
The vacancy on commercial is also sometimes related to eviction procedures. Bankrupcies but mostly not writting the actual value on books.
A lot of hotel managements are outsourced. When I thought about opening the fund. The management company sent me one hotel for sale for 13,5M which was rented to an hotel company. Which did all the management and paid a rent.
Even without the fund I couldve easily entered the hotel business. But it would mean again a lot of headaches. And missing time from my kids. Even now I feel this refurhishment is taking too much time from me. And it’s affecting kids. Last wednesday my oldest had lunch at school. I only arrived at 15h00. Which really sucked.
Once I met an old indian family which owned a lot of hotels. And the boss of that family told me the best income comes from 3 star hotels. They owned and managed the hotels and his office was located in their 3 star hotel. Even though they had 4 and 5 star joints.
Recently was in a lunch with a dutch dude. He wants to expand his 5 star boutique hotel. Because for embassies, governments etc they need a larger number of rooms. And he was buying buildings around. And was looking for a french partner. cause he wanted to create michellin star restaurant. I sent the info to some people. But didn’t follow through. I don’t care.
One detail did stick with me the guy wanted to increase the capital of the company with a new partner instead of selling shares cause like this he wouldnt have capital gains tax. This dutch cunts always have tax tricks.
Anyway for me residential property is the best asset in the world cause of cheap leverage. I don’t have any credits at the moment. But I’m feeling the itch again. Specially in south of France. I need a place to spend vacations. And something near the border of Italy would be nice. I have house in north but the water is unbearable.
My 2 cents.
Stocks/bonds, real estate, and crypto.
My 401k/IRA are mostly in index funds and the funds I treat passively, but I also am able to purchase individual stocks. I do a lot of research in this area and choose ones with good fundamentals. Of course some go sideways or don’t work out.
Interested in the real estate discussion. Always wanted to get a multi-family and rent it out. Haven’t done it though.
My 401k/IRA are mostly in index funds and the funds I treat passively, but I also am able to purchase individual stocks. I do a lot of research in this area and choose ones with good fundamentals. Of course some go sideways or don’t work out.
Interested in the real estate discussion. Always wanted to get a multi-family and rent it out. Haven’t done it though.
This is 100% true the lesser hotels are a lot easier to manage and funny you say it's an indian family because all the hotels that my dad and uncles have sold recently went to indians. The indians are willing to live there and work 24 hours a day while we had to find partnering managers to do it, just recently we had a hotel that was a cash cow but we were forced to sell because nobody we could trust wanted to drive 4 hours from home and leave their family to run it no matter how much we incentivized it.....that's a whole story in itself. To indians working yourself to death is just normal, they don't complain.
Don't get into the hotel business unless you have big money and you're just trying to park it, they don't give good returns relative to the investment amount. The money from them comes 15 years down the road when you sell them. My Dad and Uncles invest in hotels because they are older and can't make their money work for them like they used to, the hotels are a somewhat passive small income where they just park their money for the long term.
Unless you have at least $5 million dollars plus I don't really see the point of buying commercial real estate directly. You might as well just buy some good REITs. You will get similar returns with more diversification and less headache.
This was also my impression of the hotel business.
And the funds just sell them around. Knew some english people who did exactly that.
@Australia Sucks
The only advantages I see of buying property instead of a REIT. Is cheap leverage and direct ownership (even though some stocks you can buy directly from the company). If stocks and bonds had the same cheap leverage I would invest only in REITS and other stocks (except for some personal use property).
With 5M unless it’s for fun. If your not using leverage REITS blue chips and some high growth is probably the way to go.
I think after a certain threshold direct property ownership is too much burdensome. Unless you have an office working for you. It’s not passive income anymore.
Interactive brokers had good leverage conditions. Haven’t checked them since corona. You could get a margin and receive dividends which would pay it and have profit. But still nowhere near the conditions of residential real estate loans. In some places of Europe there were even negative loans. The bank would pay you to get a loan. I can’t imagine how sweet it was to get a negative interest loan and have a paying tenant. Crazy shit.
I’m starting to wonder if there is any purpose in investing in stocks or mutual funds outside of a retirement 401-k or IRA. They are for the long game, planning to survive a few market crashes and recoveries. Not to plan on “the hot stock” make 100% return in a year and sell. Unless you are a congressperson with insider knowledge, for most people that strategy is going to lose. Perhaps any found money above what you can contribute towards long-game retirement accounts, just stick most everything else in a high yield moneymarket for liquidity with some inflation offset. Play the crypto game for a little diversification if you have extra funds to play with, and a small amount of physical gold/silver to hold only as a SHTP plan for buying stuff to survive (or if it never happens, just hand it over to your children). I think the real estate game is probably for people with a lot of disposable income above and beyond having all their other expenses and investments covered.
I've always said stocks are gambling unless you have inside info or money to move the market and I admittedly love to gamble which I know is terrible. You want to do stocks just buy one share of the S&P 500 every week or even every month and sit on it until you're 70, that's where I have settled in at after trying to take out a life insurance policy and realizing I was just better off doing that....I know I know lots of variables in that but insurance is a scam screw them.