Is real estate a shitcoin? TLDR: yes.
I've heard many people refer to real estate as a shitcoin but it's hard to make sense of that statement without the numbers. Everyone still needs a place to live right? So I made a shitty spreadsheet just to get an idea and I was very surprised. I did my best to actually puff up the real estate numbers and use ultra conservative numbers in bitcoin.
I ran the numbers for a multifamily triplex with rental income on an FHA loan (3.5% down payment). The rental income really dampens the amount you spend on your mortgage payments. I also did not account for any vacancy periods, troublesome tenants, or maintenance fees in real estate. Any financial planner that fails to calculate these factors would be committing fraud and the return on real estate compared to bitcoin in this case would STILL not even be close. On the other side with bitcoin, I used a conservative 30% annual appreciation over 30 years. Yes I know it fluctuates and, over a long enough time frame, the average returns have been much higher historically but I really wanted to steelman real estate. The DCA BTC website helped me a lot with this. If you began a weekly DCA 8 years ago, you would be up 1,142% today which is 143% annually! I believe a 30% annual return on bitcoin is conservative to say the least.
The numbers I used were from a lender's estimate I got in March of this year. Note that interest rates are higher now. The triplex was quoted at $700k. Cash to close was $37,273 (remember this number). If you spent that $37,273 on financing a triplex and lived in one unit while renting out the other two, after 30 years, your property would be worth $2,134,644. I used an average 4% annual appreciation in real estate and subtracted the 1% annual property tax to reach this number. Yes I know there are factors like income tax and depreciation but I want to keep the numbers simple.
Now the fun part: what would bitcoin have done during that 30 years if you invested the same cash to close in it? I used the rental price of a local apartment that was $25,140 for the first year and I added a 3.2% annual inflation rate every year. Again, I am really trying to steelman the case for owning your own home. After 30 years, your $37,273 in bitcoin would be worth $73,882,979!
Eminent domain is the government’s “right” to take your property for public use. Even if you have your keys and deed, you still only have a claim to your shitcoin. The Sovereign Individual thesis is much more doable with bitcoin. You can easily leave the jurisdiction that is mistreating you when you are not tied down to real estate. If you spent the rest of your life DCAing into bitcoin and lived as a renter, you would not have to worry about the major headaches that come with property management. Is the jurisdiction you are living in forcing you to eat ze bugs and stay home because there are aliens outside? No problem, take your bitcoin and go somewhere else. This is what freedom money is!
This is the part where I say this is not financial advice and do your own research. I don’t know the future and I don’t claim that anything above will actually play out that way. My numbers may be wrong, if so please let me know.
#bitcoin #nostr
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Great thread, I came to similar conclusions when making a decision last year to sell my rental real estate holding for btc. Never looking back
@VelvetBlue_art
Let me know if I missed anything
You didn't. I'm talking about buying outright and living there myself. I won't need to worry about 30 years or empty rentals that way.
If we get enough we may buy 2 and rent one to a friend that needs relief, who would be a good tenant long term.
There isn't just one way to look at it or run the numbers, however yours is a great deep dive analysis.
I don’t think there’s anything wrong with what you want to do. It just depends on the individual. I was just illustrating the potential opportunity cost. The money you put down for that house has an opportunity cost. I personally would rather rent and get the bigger return I expect from bitcoin and not have to worry about things like maintenance where I live. I also want to travel around but owning a home ties you down to one location.
I think that the amount of “shitcoinyness” in real estate highly depends on the interest rate and what type of mortgage (e.g., 30-year fixed)
Like if you got in around 2020 for example with like a 2.5% fixed, I don’t see that as a shitcoin. If you’re messing around trying to buy today, you’re gonna be fucked with rates unless you have the cash.
It’s more dependent on if you need a home over anything.
I mean why rent when you can climb a mountain pitch a tent and fall asleep for 20 years like Rip Van Winkle
Real Estate may not outperform bitcoin but it gives you tangible enjoyment and freedoms you can’t obtain while renting.
Additionally you get depreciation, price appreciation and can do cash out refinancing tax free which you can dca into bitcoin with.
If you believe those things are worth giving up 70 million in bitcoin appreciation then more power to ya 🫡
Where do you get 70 million from?
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