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Comment by alistairSH | Hacker News Reader

Oh yeah, the management companies bill insane amounts. The beach house I mentioned in the sibling sub-thread - they'd bill $100 to change a lightbulb, stuff like that.

It only made sense as a medium-term investment - buy with cash, maintain for a decade (and maybe you're cashflow positive for part of that), then sell for a profit (hopefully).

Similarly, local to me, renting a house really only makes sense if you bought cheap (which for us normies means we bought it years ago, so the mortgage is cheap vs current rents).

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The returns just don’t really make sense for me, but I’m not a CPA.

The returns don’t seem substantially better than an index fund, it’s a headache to deal with, and if housing actually becomes affordable then you’re upside down (and the govt might air drop cash on upside down mortgages, probably not if you’re already paid off).

Not my forte though and I hand-waved the hell out of that math, maybe I’m way off. Just feels like a ton of capital to tie up for mediocre returns.

A beach house makes some more sense because you get the utility of being able to use it, which is worth something if you like to vacation to the same place.

No you're correct. I think the only thing you're missing is that the risk profile is entirely different from an index fund. The hit you take on returns might be worth it to you as a hedge against disastrous market conditions.

Also if your business is real estate then you probably operate more efficiently due to integration and scale plus the rental could be part of a longer term redevelopment plan.

> The hit you take on returns might be worth it to you as a hedge against disastrous market conditions.

Ahh, that does make more sense.

I do 100% believe there's an economy of scale there. Even just being large enough to employ an in-house repair person would probably be a huge savings. There's a lot of stuff anyone that can swing a hammer could fix that you end up hiring expensive tradesmen to do when you're not local.

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