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URL:  https://boards.fool.com/foolmeonce-writes-the-role-that-luck-plays-can-be-17668581.aspx

Subject:  Re: OT: KISS Date:  8/10/2002  7:07 PM
Author:  intercst Number:  73423 of 882490

FoolMeOnce writes,

The role that luck plays can be minimized however by avoiding the use of undiversified and highly volatile strategies such as are espoused on this board, during the accumulation stage. Real estate is capable of delivering comparable returns as equities with much less volatility and with a strong income component. Real estate debacles are few and highly localized. Stock market bears are common, expected and affect all investors. There have been very long (>10 year) periods when stocks have returned zilch. I am not aware of even two consecutive years when the average U.S home resale price has declined. The risk is obviously less and the role that luck plays is minimized.

Thank you for that post. It has greatly increased my understanding of real estate as an investment. Let's see if I have it right?

1) Successful real estate investors buy "well-selected properties", but we don't how many real estate investors are successful in identifying these "well-selected" gems.

2) I believe most real estate investors buy properties close to home? Am I way off base there? So in addition to buying "well-selected properties", I also need to insure that my current place of residence and its surroundings is not the site of the next "highly localized" debacle.

3) Leverage seems to be a common theme among all real estate investors save golfwaymore. This increases the downside for those caught in one of those "highly localized" debacles. Budding early retirees with assets beyond their real estate investments may seen the banks go after their stocks and bonds in an effort to collect on their outstanding real estate loans.

Have I left anything out?

Oh, and comparing the purchase of a few rent houses in a single city with the fact that "I am not aware of even two consecutive years when the average U.S home resale price has declined", is kind of like comparing the S&P500 to a concentrated portfolio of three stocks bought on margin.

intercst




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