Recently, my parents have been pushing me to buy Real Estate (Land) also prior to this, I’ve been asked many times “would i ever convert my bitcoin investment to Real Estate?” If value of Bitcoin reaches certain threshold.
This is a rational question to ask, but my answer is always, I would ABSOLUTELY NOT sell, and I would continue to hodl my bitcoin and buy even more before ever investing in the real estate market.
This always come shocking to some, but there is a lot of reasons behind why I will likely never invest in the residential or commercial real estate markets. At least, not for the foreseeable future.
I will do my best to explain the bullet points around why I see real estate as a terrible investment compared to bitcoin. I will largely focus on the residential real estate market in this article, but 99% of this applies to commercial. I am more inclined on logical thought as “Real estate is a only consumption good. I use it for its shelter utility. Real estate is treated as a capital good because money is broken and does not store wealth. Our mania search for real estate appeals to our most basic human needs: safety. It is fueled by cheap debt.”
Hot take : the more land you own the more you become a tax battery for the state.
A large number of capital (money) is required most investors will need a loan due to the high capital requirements, Most investors don’t have the capital available to buy a home without going into debt which brings to most important thing not everyone qualifies for home loans. There are a lot of extra costs (closing costs, etc.) involved with acquiring a loan and not to mention homes require maintenance.
Real estate investing is negative return due to property taxes, capital gains taxes, bad renters, vacancies, interest, insurance, maintenance, and depreciation. The only reason that people think otherwise is that they use inflationary fiat currencies as their unit of account.
You can buy tiny amounts. Yes you’ve read it right you can buy bitcoin (satoshi)worth Rs 100 minimum. Isn’t it fascinating? The satoshi is the smallest unit of the bitcoin cryptocurrency. It is named after Satoshi Nakamoto, the creator of the protocol used in blockchains and the bitcoin cryptocurrency. This always bitcoin to be extremely divisible (There are 100,000,000 sats in each bitcoin). Unlike Real Estate no loan required to afford bitcoin, Bitcoin requires no maintenance costs.
Bitcoin is more safe than real estate, It can be free to store and transport or move aroiund one corner of world to another freely. Bitcoins are stored in hardware wallets (software wallets can be hackable since your phone can be hacked). Bitcoin is 100% free to store when using a hardware wallet.
Everything is highly overvalued vs Bitcoin at the moment. The myth of “Real estate is always a safe bet and always goes up” that you’ve heard from your parents and friends for years — yeah… time to do some extra research on that fading SoV. One reason why bitcoin is hard for people to grasp. Is because now people are being forced to see what has value and what doesn’t. You can only gauge what’s valuable when you compare it to something else of value. Gold vs silver, bitcoin vs real estate. Silver vs gas etc.
Hence, Real estate is a scam investment, it’s just a durable consumer good, it’s too easy for more to get built, constant dilution so it can’t be a good store of value long term. Bitcoin on the other hand is actually limited to 21 million, so there’s no long term dilution. Think of foreign investors buying real estate abroad to offshore their wealth where bitcoin offers a better option.
Last Thoughts — Bitcoin will demonetize real estate as a SoV after it is done with gold and bonds.