Why Real Estate Is No Longer A Good Investment

I realize that exactly no one will feel sorry for me, reading this. And I’m not looking for that. Only to educate you. You’ve been told your whole life that real estate is the best investment. And I have agreed with that for most of my life.

I bought a house on the beach in the Panhandle 16 months ago, and sold it today, for 45% more than I paid! Yay, I’m a winner, right? WRONG.

I have a net profit of approximately $0, and I’ll tell you why, simply and clearly, only to make the point that unless you’re paying cash for a home you’re going to live in, I would not invest in real estate for love nor money right now. There are better things you could do with your cash you realize is failing you.

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I paid $955,000 and sold for $1,398,000. I paid some mysterious $10,000 tax called “documentary stamp tax” that nobody seems to understand, loads of other fees that keep government officials and their families fed.

The realtors, even though they’re all taking less than they were before the beginning of the final takedown of the free-market system and private property ownership, got $70,000 total in that deal, in which my house sold, sight unseen, 12 hours after listing it, with no contingencies.

So, then I’ll get clobbered by capital gains; I think it’s 38%. Then factor how much less that money is worth, where most REAL economic analysts (leave Janet Yellen and Jerome Powell and other government talking heads out of it) say we’ve lost about 35% of our buying power in 2 ½ years.

There were lots of other fees and taxes, the total of which was well over 20% of the difference between the price I paid and the price I sold at. Many, many hands in the till. So, the buyer, a professional basketball player, just paid a ridiculous amount of money for a lovely home, and a lot of people got a cut, and I’m at $0 net gain.

Again, I’m not trying to make anyone feel bad for me. I don’t even feel bad for me. I feel bad for all the people being scammed in this system. I’m trying to help you see some important things that are going on in real estate, and what follows in this post is much more important than what you’ve read so far.

Granted, had that money sat in the bank, it would have LOST about 35% of its purchasing power. My investment kept up with inflation. Now I’ll reinvest in other things (keep reading) that aren’t about cashflow or appreciation–they’re about protecting capital.

But I hope this makes a few things clear to you:

1. You'll be paying an all-time high price for real estate, right now, right before possibly a bloodbath, and at least a major softening in the U.S. real estate markets.

2. Real estate, especially rentals, are not worth what they were; I wouldn’t buy an apartment building, a condo, or a home right now except one I wanted to live in.

3. A lot of people are propped up by the transaction, but the buyer and seller lose. I would place a bet that real estate takes such a hit by the end of the year that the house this pro basketball player bought (and the other properties I own) are worth 20% less (or worse) by the end of the year, probably sooner, AND you’ll have a glut of sellers on the market, few buyers.

4. As I’ve been saying since 2020, investing in commodities is a much, much better idea than buying homes, especially leveraged.

5. The crypto and stock and other markets are wildly volatile and the stock market is poised for the biggest fall since 1929, only this time, it’s not 2% of America invested in the market like back then. Now it’s a majority of Americans in the form of 401k’s and IRA’s and pensions–which is how your government got you, in the 80’s, to invest in the government and in the fake, propped-up stock market.

The real estate market hasn’t capsized yet, but legit analysts–willing to tell you the truth rather than what you want to hear–will tell you that with the soaring property values plus Jerome Powell raising interest rates every month this year means people can’t qualify for their loans anymore, mean that the real estate market is also poised for a bloodbath.

Which is going to make it very hard for you to get OUT of your real estate, very soon, including now in some markets.

(Beachside properties stay high longer, because the wealthy want the limited beachfront properties and most wealthy people don’t know what you’re reading right now. I have found exactly ONE other real estate investor who sees what I do–even though he’s also a mortgage broker, and he told me this only when I called him, he sure as hell isn’t going to tell you this when you want a loan.)

6. If you need proof of the previous point, in 2022 so far, 62% of lending institutions have laid people off, and there are half the mortgage loan applications that there were, this time last year.

7. Renters can pivot in this economy much more easily than owners, in the socialist-well-on-its-way-to-Communist economy we’re in, as I’ll explain.

Keep in mind that confidence in the real estate market props up my own net worth, and most of my net worth is in real estate. It benefits me in no way at all, to tell you this.

However, Biden’s rent moratoriums are now almost 2 ½ years old, and renters have all the power. I don’t want to encourage any renters to quit paying rent, and I think Americans WANT to pay their rent and 80% or more still are.

The problem is the 20% who can’t pay their rent, or have figured out how epic their squatters’ rights are.

The states and counties and cities don’t want growing tent cities, and the people living in their cars that line some highways in CA and many other places. All these governments will do whatever it takes, against the landlord and for the people falling into poverty, because then the poverty becomes the monkey on THEIR backs.

Sure, the SCOTUS struck the rent moratoriums down as unconstitutional. So what. The Supreme Court has struck down a lot of things the last couple of years, but there’s no enforcement, and states and municipalities are carrying on, refusing to enforce evictions, all over the USA.

Law enforcement is overworked and underpaid and they cannot even come close to dealing with some landlord’s desire to get a constantly-inebriated misbehaving tenant out of a property he hasn’t paid rent in for 4 months. (Yes, this happened to me.)

I got almost completely out of long-term rentals last year. The house I just sold was a short-term rental, and our bookings were last-minute, and lower than last year, but still gave the property a positive cashflow.

I am letting some properties sit empty, because getting $0 cashflow from it is better than having a squatter. Others, I will sign a lease only for the length of time that they can pay upfront the entire amount of the lease. And there’s no month-to-month provision, like before 2020.

I feel terrible doing it. But real estate WAS my retirement plan, as I near retirement age. And I’m running a business, not a welfare state–we used to believe in the free market system around here, but I see even political conservatives online constantly attacking people trying to make a living, or property owners. We don’t seem to believe in the free market system driven by supply and demand and freedom, any more.

Mainstream media is floating the idea of rent controls, and I believe they’re coming. They already exist in a few places, such as NYC. In this case, landlords get foreclosed on because as their insurance, taxes, and adjustable-rate mortgages rise, they cannot increase rents to keep pace.

Basically, in 2020, the corrupt U.S. federal government and the globalists pulling the strings wanted to avoid chaos in the streets and premature homelessness and desperation. They wanted us quietly waiting at home, for the “economy to re-open,” waiting till it’s “safe” to come out–watching our Netflix and numbing out to whatever substances we’re into.

They want homelessness and desperation, but only at the right time, when they can point at the wrong party, for who the “bad guy” is.

So they can forgive you of your debts and put you on their digital slavery system, in which you work for the state for whatever they want to pay you, which in 70+ other communist countries, is much less than you need, to live, AND you have to get all the mandated injections and they can freeze your bank account and they can put you in jail for protesting.

Kind of like they just sentenced Dr. Simone Gold to jail, for committing no crime whatsoever on Jan. 6. She wasn’t even one of the people ushered into the Capitol (i.e. “insurrection”).

The states favor tenants over landlords, and so does every communist and socialist country in the world.

In fact, this is about to get dark, so if you don’t want to read it and you’re not a landlord, maybe don’t read this paragraph. We’re just a few years behind China in rollout of many policies, and they’re pushing us hard in their direction – digital ID and vaxx passports, anyone? –

– but in China under Chairman Mao, he told the tenants to KILL the landlords. And they did. And Mao graciously allowed them to inhabit the properties, rent-free, thus becoming a hero to the people, who ironically still flock to Tiananmen Square every year, to pray and weep and thank the long-dead Mao as if he were gracious God almighty.

(Right. Tiananmen Square where hundreds or thousands of Chinese were slaughtered and wounded by their own government, for protesting, when I was in college.)

Anyway, you might say, “Well, it could never happen here.”

Yeah, well. Being a landlord was more stressful than I was willing to deal with, and we’re nowhere near that yet. All the things happening here look a lot to me, like pushing us, an inch a day, into digital control and ID’s and turning our green passport red if we break some rule.

Like the people who left home in Shanghai during a two-month long lockdown. All this surveillance and control is so that they don’t even need human enforcement. So that we can’t leave home without potentially going to prison, like even your mainstream media is telling you is happening right now in China.

Anyway, listen to my crypto webinar if you want to learn about how the world is moving to decentralized finance. And why morally and for our future, as well as the future of those who survive in the third world, we should all put our shoulder to the wheel and be part of that.

And I’ll teach you why gold, silver, cash out of the bank, and credit unions are a good way to re-position. And why water, food, energy and a garden you build NOW, not later, forms of energy, and commodities like an extra water heater and a clothesline, stuff like that, will be worth more than the money you paid for them.

Gold has been seized by the U.S. government before, so that’s not the whole answer. Silver is hard to store, bulkier, but may be part of surviving in the transitional economy.

But commodities are risk-off assets, which is appropriate for investors who want to preserve capital and avoid high risk. There is no counterparty risk, whereas the counterparty risk of real estate has never been bigger.

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