Real Estate: Considerations for Financial Portfolio

Real estate may not be necessary for Nathan at this stage due to time constraints and potential risks involved in managing properties.

### Real Estate Investing: FOMO vs. Financial Strategy
* 💰  Real estate can be a powerful investment with unique financial benefits, such as **leverage, tax advantages, and inflation protection**.
* ⏳  However, it is not a passive investment and requires **significant time and effort**, especially to do it well.
* 🏠  For individuals with busy careers and limited discretionary time, like an ER doctor and a teacher/coach, **real estate may not be the most efficient use of resources**.
* 📊  The decision to invest in real estate should align with the individual's **financial goals and lifestyle preferences**, rather than FOMO or social media influence.
* 💼  Real estate investing is typically recommended at **Step 8 of the Financial Order of Operations**, after maximizing tax-advantaged accounts and other investments.
* 🏢  Alternative ways to invest in real estate, such as **REITs** or **real estate index funds**, can provide exposure to the asset class without the **active involvement of property management**.
* 🔑  It's important for spouses to be aligned on real estate investment decisions, considering the **potential risks and rewards of leveraged debt**.
* 💡  Ultimately, the most important factor is to determine the **most efficient and effective use of both financial resources and time**, whether that includes real estate or other investment strategies.

[Music] All right, Nathan's question is up next. It says, My wife and I are able to reach about a 30% savings rate utilizing our various tax-favored accounts. I sometimes feel FOMO not investing in real estate outside of our primary home. My wife and I both have involved jobs and hobbies - a teacher and a coach, an ER doctor are the examples that he gave - and we don't want the hassle factor of real estate. So his question really is, should he be feeling FOMO at this stage? Is real estate how important is real estate or how powerful is real estate in a portfolio? I get this but based upon social media. I mean you see it and everybody's like everybody tells you you should be doing real estate. What are your thoughts on that? Yeah, I don't want us to come off as real estate haters because we are not. However, folks that want to do real estate, get into real estate, it's not as easy as the brochure suggests. And Nathan, you just said the

brochure the brochure the way you said that maybe you know you hear you know how you hear about Bitcoin Bros and all the other you can probably say real estate Bros too keep going. Yeah, so Nathan you said that one of one of you is a teacher and a coach, which takes like a gazillion hours out of the day, and you have like after school and extracurricular practices, and the other's an ER doctor, which means you're likely on call often, so you naturally don't have a ton of like discretionary time. So the thought of getting into real estate, at least in this season, if it's something that you're passionate about and something that you're curious about and something that you're interested in, that's one thing. Then you kind of can like check those boxes. If the only reason you want to do it is, oh I think maybe that's what I should be doing because I watched a Tik Tok of a guy who's doing this thing and it makes all this sense, I don't know that I would.

fall into the trap because what you have to answer is for you and your spouse. What is the most efficient and effective use of your dollars and most efficient and effective use of your time. And while real estate certainly can be a part of that, once you get into step seven and step eight of the financial order of operations, I don't know that real estate is something you have to do or something you should be experiencing fomo around because oftentimes I think anyone who's been in real estate for a long period of time will tell you, yeah, some of it's great and some of it's awesome, but it's not always that way, and there is some headache and some trial that comes along with it. You agree, disagree, want to fight about that? Um, I wrote, look, this is definitely a step eight of the financial order of operations. If you're saving 30%, you're probably at that step eight level, and this is where you need to kind of know thyself in the fact that I love real estate, but I love real

estate for all that it offers you there are some unique Financial mutant things that real estate with the The Leverage debt um you know the return that can come from that but that's also why why you have to make this a step eight is because leveraged debt can turn into a curse very quickly cuz yeah you love it when you're making you know rates of return on something you put down a small portion of or 25% on and then you've got the other 75% Finance you feel great when that is appreciating off of a cash flow situation but when it turns ugly meaning you you require other people's money to pay your mortgage and you don't have the money it can turn into a nightmare really quick I also like that you get some depreciation and other things that come from some tax benefits potentially but but here's the reality of the situation Nathan is that um it is not passive anybody who does this well and maximizes it is actually in the Weeds on it um despite what everybody

says on social media, to do real estate well, you're going to be involved in it. And that's why if you find that you're in that messy middle, yes, you're reaching a lot of your financial goals, but you feel like between the kids and all the life stuff and the relationship stuff, you just don't have a lot of extra hours in the day, don't go put yourself into something if you're going to do it in a half-baked way. And then you might get on the other side of how bad lever debt it can be because your spouse will be like, why are we in this just because you saw something on social media. The wise have to unite and connect with how you want to spend your time. And so that's why spend some extra effort figuring out, is this something I want to do? And then there's nothing wrong that says if you feel like, hey, real estate is something that you want to go into, you can do REITs, you can do real estate.

index funds. There's ways that you can do this without opening up six Airbnbs in your neck of the woods. You know, you can still get into the asset class of real estate, feel like you're getting that inflation protection, and all the other things that come from it. You just don't get to make content on how you own all these houses off of Airbnb or something. Yep, agreed.

We Feel FOMO for Not Investing in Real Estate!

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The Money Guy Show

The Importance of Real Estate in a Investment Portfolio

A couple is saving 30% of their income but wonders if they should invest in real estate due to FOMO, considering their demanding jobs and hobbies.

Real estate can be powerful in a portfolio, but it's not as easy as social media may suggest.

Given their busy schedules, they should only pursue real estate if they are truly passionate about it, not just because of outside pressure.

The Role of Real Estate in Financial Planning

Real estate can be a part of financial planning in later stages but may not be necessary for everyone.

It offers unique financial benefits through leverage and tax advantages but can quickly turn into a nightmare if not managed well.

Despite the potential returns, it is not a passive investment and requires active involvement.

The Importance of Fully Committing to Real Estate Endeavors

Fully committing to real estate is crucial, especially when juggling various responsibilities and financial goals.

It's important to thoroughly assess if it's the right path, to avoid half-hearted attempts that could lead to financial strain and relationship tension.

If real estate is appealing but time is a constraint, alternative options like REITs can still offer involvement in the real estate market.

Investing in Real Estate without Buying Property

You can access the real estate asset class and its inflation protection through alternative methods, instead of owning multiple Airbnb properties.

This allows you to gain the benefits of real estate investment without the need to create content about owning numerous houses for Airbnb.