You can fake it on jewelry, clothing, food, vacations, cars and virtually anything except for property.
Yes, you can take out a 30-year fixed mortgage and put down only 5% on an Upper West side penthouse, but on paper, it doesn’t mean you own it.
A quick way to tell if someone is truly wealthy or fake is to check out their property. Stealth wealth frugality is mainstream and hidden everywhere. The rich don’t bother with image, they focus on internal wealth not external validation. They are better than that so they stash their money in appreciating assets that also provide a sanctuary to allow them to produce more overtime. They spend to earn not to loose.
Buying a property is important for those who take care of themselves. It is their mini oasis and with most industries able to offer the accommodation of WFH, white-collar workers are able to work from the comfort of their spacious resort.
A home is a sanctuary that never goes out of style. Not only does it provides security, yield + utility and appreciate as an asset, it allows a homeowner to be diversified and not fearful, unless they cannot pay their mortgage on time or have 80% of their wealth tied up in their property. I still cannot fathom how 80% of Americans in ’08 had 90% of their wealth tied up in their properties! No wonder bankruptcies occurred left and right.
If you were able to ride out that treacherous wave, still pay your bills on time and maintain your property till today, congrats, you are ahead of 90% of Americans who also sold at the inopportune time .
I hope the rest learned their lesson by now.
No wonder renters will never be as wealthy as homeowners. There is a -100% return for renting but don’t hate against it just yet. It’s a pleasurable convenience to just pack up and leave the keys every few months, especially if you have the disposable income to do so.
All in all, owning real estate will always be in-demand, especially in areas with extra curb appeal and in this frothy overvalued seller’s market, with low inventory and sky-high demand, keeping your property for the long-term is your best bet.
Just like in the market, buy and hold is the jam.
Property Tour
Real estate is the most tax advantageous asset class because it is considered a business. The ideal situation is to fully own your main residence and rent out a fixer-upper to generate recurring cash flow and passive income, deduct interest off of expenses, earn utility, have a physical tangible asset to maintain and ironically earn more return for less volatility. Learn how that’s possible here.
Along with equities and fixed-income, real estate is second on the list of the most lucrative asset class of millionaires and up. There’s no secret majority of the richest’s wealth is tied up in the market and illiquid/alternative assets so it’s key to stay diversified and remember to balance your capital with less-risky holdings such as short-term debt, CDs, treasury bills and notes, TIPS if you want to keep up with inflation and not let it erode your savings, possibly some art, farmland, real estate crowdsourcing opportunities and of course, remember that cash cushion to keep you afloat.
Inflated
In essence, inflation isn’t just in consumer everyday products from milk to beef, it’s happening everywhere. From hot tech stocks to real estate, wages and hotel rooms, it’s all rising before our eyes.
Inflation means prices are gouging a.k.a demand exceeds supply. With supply chain shortages due to low inventory in computer chips and for periods, gas due to cyber-attacks, low0borrowing rates, pent-up demand and the swift rollout of the vaccine, people want to get out and spend more than ever which industries aren’t prepared for.
There has been a large surge in demand on all fronts. Real estate took off back in March 2020 when people invested more into their homes and now the buying frenzy is still here but at the same time people are sick of their renovated bathroom. They want to get out! People are fleeing abroad hopping on that plane and flying to Greece. Out of my friend group, 3 are already aboard to Europe and are fully aware they are spending more than back in 2019, their intended departure.
In order to take advantage of real estate, you must seek hidden deals and that starts with NOT buying in a seller’s market. The problem is people are so allured by sales and deals, a.k.a low-mortgage rates currently hovering around 2.5% and low-interest rates (perfect for borrowing) to pay off good debt “mortgage/HELOC (home equity line of credit) they are making poor decisions.
A majority of buyers during this time which consist of Millennials, 80% say they regret their purchase! That’s a choice you cannot reverse.
When it comes to real estate, the most expensive and emotional purchase a young adult will make, there’s no turning back and must be thoroughly considered beforehand. As a result, you will probably get a better deal and feel more confident buying when you really need to move then want to just because everyone else is.
Just because that shirt is 40% off doesn’t mean you AREN’T spending money.
Simple but hard to wrap our heads around.
Last thing to note, if you are snooping around for for wealthy, realize they abuse real estate.
The average millionaire owns 2 properties with at least 1 with a mortgage, presumably on the rental so it can pay for itself. Majority of luxury homes made for the top 10% tend to be empty or if they are used, rented out since majority of luxury properties in major cities from New York to Miami are owned by Saudi oil giants or Alibaba partners. You will rarely see Beyonce or Oprah inside. They cherish traditional.
Real estate is meant to be deceiving since it’s personal and sacred along with a powerful money making machine. American real estate and land is far cheaper to buy which attracts foreign investors to park their money here. The wealthiest on earth sometimes don’t even own since they travel so much, don’t want to maintain one and prefer to rent luxury and buy utility to dish out $50k pre month on a property instead.
Whatever decision you make with real estate, try to take ownership of it and not let it take up 90% of your monthly bank statement. It is an alternative investment for a reason and a powerful hedge against the craziness in the market. Don’t waste your time glamorizing over fake wealth.