“You are going to put all and much more (debt) into a single, highly illiquid investment. It takes ages to buy and sell, and there are eye-watering transaction costs. The asset is constantly deteriorating resulting in high expenses.”
Would you take the deal or just buy #Bitcoin ?
While I agree, with the sentiment, there are caveats:
First, leverage. In most jurisdictions, you can borrow fiat and buy 10 units of real estate with an initial fiat investment equivalent to 1 or 2 units. 1 BTC costs 1 BTC in fiat.
Second, cashflow. Real estate can be rented out to create cash flow (and if you've done your homework, profit vs inflation). Bitcoin doesn't "do" anything. There is no use in borrowing it, so there is no profit in lending it.
BTC's utility is the absolute certainty that whatever value is stored in it is inviolable. Also, for the coming years at least, it will continue to appreciate at double digit yearly rates above the fiat inflation rate. Even once it reaches whatever order lf magnitude of market cap humans decide to assign to it and its upside is just above inflation, we can still be sure that it will continue to appreciate. So it makes for THE ultimate form of collateral.
But you still must borrow fiat against it to invest in other assets that can produce cash flow - like real estate. Otherwise, you will find yourself having to sell your BTC and eventually going back to being poor.
Thanks for the detailed response and I agree. Real estate as an investment might make sense under certain circumstances.
However, I was more talking about real estate that you are going to buy and use it yourself, which in most cases won’t make sense and enslaves you for 20-30 years.
