How I beat Bitcoin

Bitcoin would have been nice to have bought earlier this year.  But wouldn’t any stock be nice to buy that you knew was going to appreciate?  Wouldn’t it be nice to not worry about it all crashing tomorrow?

Imagine an investment that has consistently beat inflation for hundreds of years.  An investment that has only taken two major hits in the past 89 years?

It is called real estate.

I’ve often wondered why so many people are skiddish about investing in real estate.  Sure, it takes a little more time than buying/selling stocks.  And it isn’t as liquid either, but part of what makes stocks so volatile IS how easy they are to buy and sell.

And then there is my favorite part of real estate investing:  OPM (Other people’s money.)

When you buy a stock, you use 100% of your money.  When you invest in real estate, you can end up with 0-20% of your own money in the deal and let tenants pay the rest for you.  You end up owning 100% of the asset without paying anywhere near that much to acquire it.  Anything you make in rent that is above paying your mortgage and maintenance costs is like a dividend.

Here is one of my examples of how to do it:

I bought a house for $100k.  I spent $45k fixing it up.  Now I have a house with new roof, windows, furnace, air conditioner, water heater, hardwood floors, etc.  All brand new.  It appraisers for $180k.  I get a loan for 80% of that, which is $144k.  So, I now have spent some time and effectively $1000 of my own money.  I have a house that is practically new AND $36k in equity as soon as I am done.  The rent covers the mortgage and maintenance.  Life is good.  That is a 3600% return on the investment in about 6 months.

Fast forward a few years and the house is now worth about $210k.  It is on it’s second tenant, so the rent is higher.  More equity too through appreciation and through the tenant paying down the principle.

Rinse.  Wash.  Repeat.  I’ve done it several times.  You can too.

Better than Bitcoin.




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