@The_DrewFeldman @DadInvest Side w JD, clients are paying you to do it so they don’t have to. However, most clients do want help from their advisor to educate their kids. I’d focus on that.
Saw a “generational expert” give a talk on this exact topic. His take was that this generation grew up w the ability to edit messages before sending so they could verify the message they want to get across is clear vs. a phone call where they could potentially misspeak. I get his point, but still phone skills are important for anyone that wants to be successful.
@acaseofthegolf1 There are financial decisions then there are lifestyle decisions. If this is a lifestyle/fun thing, finances become less important. Seems like a not great financial move, but if it adds value in other areas it might offset the finances. Food for thought.
I bought a property in 2017 to Airbnb it.
Purchase price: $315,000
Down payment: ~$63,000
Goal: Passive income, baby!
Today, I sold it for $377,750. 🥳
BUT let's compare that to the return if I put that $$$ into the S&P 500.
For the first 6 years, I made about a 4% cash-on-cash return.
Not bad…Until it wasn’t.
The last 2 years?
ZERO profit.
I broke even after repairs, maintenance, and all the joy of being a landlord.
So, 8 years later:
💰 Cashflow returns: ~$17,000
🏠 Appreciation: $62,750
🏦 Mortgage paid down: $40,173
🧾 Tax benefits: ~$12,500
📉 Selling & ownership costs: -$116,736
👉 Net profit: $11,390
(Yes, really.)
Now let’s say I just put that same $63,000 into the S&P 500 in 2017 and went on with my life…
- No leaky toilets.
- No surprise HOA roof repairs.
- No property managers messaging you at 1AM about parties.
Result?
👉 $108,037 in profit
Let’s recap:
🏠 Rental ROI: 18% total over 8 years
📈 S&P 500 ROI: 171% total over 8 years
That’s a 10x difference.
The hidden truth?
Owning property can build wealth…
But
✅ It is NOT liquid - I had to cover costs for a year while it was listed on the market
✅ Saturation - The market got flooded in Austin with AirBnBs which reduced my returns greatly
✅ Hassles - Even with property managers you will always have issues.
✅ IRR - Compare the returns to OTHER investment opportunities
Otherwise, you're working way harder for less return.
If I could go back?
I'd Index and Chill.
Let the S&P 500 do its thing while I focus on business and life.
As @Ramit says real estate "can" be great—just don’t let the hype make you think it’s passive or guaranteed to outperform. You really have to understand the full costs and hassles!
My wife doesn’t work, and we still have this problem, so “retiring” her doesn’t help this issue. We have a sitter that comes for 8 hours once a week which helps but still, 5-9 is work time. We have another sitter that comes on Thursday from 6-9/10 and do a weekly date night. That’s been our solution, but only once a week isn’t ideal.