3387: Why Your House Is A Terrible Investment by JL Collins on Real Estate Myths

When you're ready to start your business, Northwest's registered agent gives you access to thousands of free guides, tools, and legal forms, everything you need to launch and protect your business in one place. Northwest's registered agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly thirty years. They're the largest registered agent and LLC service in The US, with over 1,500 corporate guides, real people who know your local laws and can help you and your business every step of the way. Plus, with Northwest, privacy is automatic. They never sell your data and handle all services in house because privacy by default is their pledge to customers. Don't wait. Protect your privacy, build your brand, and get your complete business identity in just 10 clicks and ten minutes. Visit northwestregisteredagent.com/ofdfree and start building something amazing. Get more with Northwest Registered Agent at northwestregisteredagent.com/ofdfree. This is Optimal Finance Daily, why your house is a terrible investment, by JL Collins of jlcollinsnh.com. James Altucher calls homeownership a part of the American religion, so I know I'm treading dangerous ground here. But before you get out the tar and feathers, let's do a little thought experiment together. Imagine over a cup of coffee or a glass of wine, we get talking about investments. Then maybe one of us, let's say you, says, Hey, I've got an idea. We're always talking about good investments. What if we came up with the worst possible investment we can construct? What might that look like? Well, let's see now. Pulling out our lined yellow pad, let's make a list. To be really terrible, it should be not just an initial, but if we do it right, a relentlessly ongoing drain on the cash reserves of the owner. It should be a liquid. We'll make it something that takes weeks. No, wait. Even better. Months of time and effort to buy or sell. It should be expensive to buy and sell. We'll add very high transaction costs, let's say 5% commissions on the deal coming and going. It should be complex to buy or sell. That way we can ladle on lots of extra fees and reports and documents we can charge for. It should generate low returns, certainly no more than the inflation rate, maybe a bit less. It should be leveraged. Oh, this one is great. This is how we'll get people to swallow those low returns. If the price goes up a little bit, leverage will magnify this, and people will convince themselves it's actually a good investment. No. Don't worry about it. Most will never even consider that leverage is also very high risk and could just as easily wipe them out. It should be mortgaged, another beauty of leverage. We can charge interest on the loans. Yep. And with just a little more effort, we should easily be able to persuade people who buy this thing to borrow money against it more than once. It should …