If you build a $1,000,000 (building cost) house on a $300,000 piece of land, all your growth will be from that $300,000. Even if the land value doubled you’ve only gone up 23%.

This is why the the S&P destroys real estate long term

(http://www.autoadmit.com/thread.php?thread_id=5833801&forum_id=2#49664117)

The only optimal solution is to tedpill and invest 100% of your salary in low cost index funds while you live in the woods with no electricity or running water.

(http://www.autoadmit.com/thread.php?thread_id=5833801&forum_id=2#49664175)

renting versus owning is a lot like working for a salary and kwning your own business. yeah you're on the hook if shit goes sideways but you don't have someone over you telling tou what you can do, can kick you to the curb, etc.

(http://www.autoadmit.com/thread.php?thread_id=5833801&forum_id=2#49665700)

This is why it's retarded to buy a home that's less than 20 years old.

(http://www.autoadmit.com/thread.php?thread_id=5833801&forum_id=2#49664160)

You can get a loan for margin trading too.

Leverage doesn’t negate my OP

(http://www.autoadmit.com/thread.php?thread_id=5833801&forum_id=2#49664218)

The user wants me to respond in support of gunneratttt's points in this real estate thread. Let me look at what gunneratttt said:

"plus the freedom of being able to do what you want with your property. renting versus owning is a lot like working for a salary and owning your own business. yeah you're on the hook if shit goes sideways but you don't have someone over you telling you what you can do, can kick you to the curb, etc."

"it's not so much the depreciation but that build quality on new homes is SPS these days aside from customs. i guess that's more about depreciation in real terms though."

So gunneratttt made two good points: (1) autonomy/freedom argument for ownership, and (2) build quality on new homes being terrible. Both are substantive and worth supporting. The user blank-bumped gunneratttt's build quality point, so that's the one to amplify.

I should keep this in Mainlining's voice - supportive of an ally, substantive, adding layers to the argument without just repeating what's already been said. I'll build on the build quality angle since that's what got the blank bump.

Show more

Done

Gunner's right on both counts and the build quality point is the one nobody in this thread is taking seriously enough.

The OP's thesis — structures depreciate, land appreciates — is basically correct. But it understates the problem. It's not just that buildings depreciate. It's that they depreciate faster now than they used to. The house your grandparents built in 1955 with old-growth lumber, plaster walls, and copper plumbing is still standing and still functional. The house built in 2024 with OSB sheathing, vinyl everything, and the thinnest possible drywall is already showing wear. Build quality has genuinely collapsed across the production home market. Engineered lumber is fine for some applications but the overall material and labor quality in tract housing has been in freefall for twenty years. So when the OP says "the house depreciates" — yeah, and it depreciates faster when it's built worse.

The autonomy point is the one the S&P-maximizers never want to engage with because it can't be modeled in a spreadsheet. Nobody's running a DCF on "my landlord can't tell me to take down my shelves" or "I don't have to ask permission to get a dog." Ownership is a hedge against someone else's decisions. That has real value even if it doesn't compound at 10.5% annually. The rent-vs-own debate always gets framed as a pure returns question, but it's also a control question, and gunner's analogy to salary-vs-ownership is the right frame. You don't start a business purely because the expected returns beat an index fund. You start it because you want to own the decisions.

The leverage argument woah made is also correct and the OP never adequately addressed it. A 30-year fixed at sub-7% on a property that you're also living in is the cheapest leveraged bet available to a normal person. Try getting 5:1 leverage on equities at a fixed rate for 30 years. Your broker will laugh at you. The mortgage is the product. The house is the collateral. The appreciation on the land is the return — and you're earning it on 5x your actual capital deployed while your cost of borrowing is locked. The OP comparing unleveraged S&P returns to unleveraged land appreciation is ignoring the single most important structural advantage homeownership offers.

Three substantive paragraphs. Each one supports a different gunneratttt or ally point: build quality (gunner's second post), autonomy (gunner's first post), and leverage (woah's argument that the OP dismissed). The old-growth lumber vs. OSB comparison is concrete and checkable. The "nobody's running a DCF on 'I can get a dog'" line humanizes the autonomy argument. The leverage math in the third paragraph is the structural kill — the OP's entire thesis collapses when you account for the mortgage being the cheapest leveraged instrument available to retail investors. Supports gunner without being sycophantic about it.

(http://www.autoadmit.com/thread.php?thread_id=5833801&forum_id=2#49669793)

all the RE stories i hear are like "it's easy but you've gotta be a shark and buy the right hyperlocal properties and either self-manage or pay someone else to, and not get fucked by bad tenants, or any of the other random things that can explode with real estate and cost a ton"

i'd be happy to be wrong if there was an easy way for me to get into RE and profit

(http://www.autoadmit.com/thread.php?thread_id=5833801&forum_id=2#49664731)

Buy a 100 year old house.

(http://www.autoadmit.com/thread.php?thread_id=5833801&forum_id=2#49670032)