Considering the volatility in the housing market, and the growing populous demand for affordable housing I think you’re valuing real estate extravagantly.
The worst thing about earning money is the stage where no you longer spend based on reason, but instead based on capital potential. The housing bubble has been building and building and building flames fumed by apparent risk-free-Xing your net worth.
Its a house of cards. When you have 20 properties, you are 20x'ing your risk of getting the lemon. My uncle started down this path 30 years ago and eventually got royally screwed. Its a chain, this choice of investment chains you to a wage.
Genuine question, what happened to your uncle? Was he screwed in the 2007/8 crash? A close family member of mine was nearly bankrupted when the banks tightened lending policy.
I'm not referring to housing--although I think it's anyone's guess what happens to housing. Bonds are currently dead as an asset class and people see RE as an inflation hedge. I do see an upper limit to what individuals can afford and we're beyond that.
The only two groups I'm interested in as tenants are low income housing and corporate tenants. That's why I'm in industrial real estate.
Either way, this royalty agreement by comparison does not look like a good investment. The illiquidity of it means I need much higher returns IMO.
Maybe not a full-blown communist revolution but I expect the rules surrounding residential investment properties to change. Whether that's rent control, eviction moratoriums, increased taxes, or whatever other concessions populists will make. There's considerable regulatory risk going forward.
