OK here is a brief version of a convo I had a few days ago with a friend about #Bitcoin vs Residential property investment. I was asking him about ROI and such on property investment. He's a property investor and construction guy so he's well versed. This is in Australasia to be broad about location but think it applies elsewhere also.
Bitcoiner: Last time we spoke you mentioned a 50% ROI on property investment as what you were aiming for. How long before you could realize this you think? Is 5 years fair?
Property Guy: Average property increase is 5-6% p/annum however being able to borrow so much against property means on average you get a 5% or 50,000 ROI on a $,1000,000 house with a $200,000 investment.
Bitcoiner: Ah so 50% gain on initial investment might take 2 years with this setup?
Property Guy: Yeah but haven't factored in expenses yet. Rent on $1,000,000 property would likely not cover interest payments on a mortgage of $800,000. Then factor in insurance, local govt rates (ie taxes), insurance, property management maintenance etc.
Bitcoiner: I was wondering about costs. How much is left after all those expenses after say one year timeframe?
Property Guy: None. With an 80% mortgage you would likely have to add more of your own money to cover all the expenses on top of rent. It is only when your equity % is higher that it becomes cash flow positive.
Bitcoiner: So how long to get enough equity to become cash positive?
Property guy: Hard to say. Lotsa variables. Maybe 7-10 years. By then you will be reducing your loan amount (interest payable) and rents would be expected to have gone up. Its a slow process generally and making money in the short term relies on getting a bargain initially, development or catching a boom.
Bitcoiner: Bro the property game sucks.
Property guy: You looking to get in?
Bitcoiner: No just wanted to understand the property investment ROI and timeframes better. You realise Bitcoin over the same period of 7 years has gone from $628 USD p/BTC to $70,000 USD p/BTC and the cost to hold it would be only a couple hundred dollars that entire time?
Property Guy: Shit that's a lot but I don't get Bitcoin just gonna stick to what I know.
#nostr #plebchain #coffeechain #whybtc
