The hard truth: real estate is not what it’s cracked up to be. On average, Americans start investing before age 30, but statistics say that over 78% of those still cannot afford retirement.
Middle-class investors need to rethink long-term investment plans. Most American investors take the wrong approach by flocking to real estate for income and ignoring the huge risks and pitfalls. Accumulating the equity required to generate enough passive income to quit their job is a lofty dream that could take them decades, if not a lifetime.
Benjamin Tal, chief economist at CIBC World Markets, calls it the cult of real estate: “We need to stop this brainwashing. As we think of housing as a commodity, we encourage people to buy anything irrespective of whether it’s going to meet their needs over the long-term.”
For example, in property ownership, returns on investment don’t come quickly or easily. After the costs of repairing, remodeling, and maintaining a property, it takes a big sale to break even.
“I love real estate and it should be in everyone’s portfolio,” says Brice Royer, CEO of Medallion Investments, “…but it can be difficult for most busy professionals to find a property with enough upside and cash flow to justify the time and hassle of being a landlord. For most of our clients, it is simply not practical to meet their goals.”
Buying rental properties doesn’t yield fast profits either. It’s a very slow way to make money – while it may profit in time, being a landlord is a high-maintenance, long-term risk.
Long story short, being overleveraged in real estate is a huge, unnecessary financial burden. Stock market investments and starting one or more businesses are the most efficient ways to build wealth. To avoid getting stuck in the game of real estate, Medallion Investments CEO Mr. Royer has some advice.
“Peter Thiel, the co-founder of Paypal, turned a $2,000 investment into $5 billion in 6 years or so. And I can tell you that it wasn’t through real estate… You have to follow the smart money.” Mr. Royer advises middle-class investors to learn the investing strategies of the ultra-rich in order to bridge the wealth gap with the middle class. One initiative in doing that is through a 45-minute presentation online to help investors learn how growth strategy helps clients turn $10,000 into $1 million in just three simple shifts.
“If you are a middle-class investor and want to retire early without gambling money in real estate or working 9 to 5 until you’re 65, this training is for you,” said an internal source.
Investors know of success in real estate, but not of the massive, nearly inevitable opportunity cost from a lack of diversification. Few are lucky enough to strike it rich from real estate. Why risk a lot to make so little?
About Medallion Investments
The team at Medallion Investments offers advisory research and investment consulting for American and Canadian investors. See what clients have to say.