Nathaniel Thiele

Long-term buying and holding of real estate have hidden costs. Here are some of the hidden costs of owning real estate.

1. Real estate has about 1% of the purchase price as yearly mateince cost and oftentimes can cost more than be up to ten years for a major remodeling.
2. Real estate price don’t include applicances, furtinture, and technology oftentimes these added features are not included and may add up to 10% of the cost of the home.
3. Real estate has a 6% closing fee when you sell a home using a realtor meaning you most likely will have 6% taken off as a fee.
4. 95% of single family home real estate investors lose money-this fact means that rarely due most single home family real estate being dependant on one family and has higher risk.
5. You also have to have 10% of the home value as reseves in cash to ensure when the property is vaccant, exterme weather event, mold or insect event occurs.
6. Real estate debt can manginfy returns. If you are a good investor, your returns go up expondetinally. If your a bad investor, the same thing happends.
7. Real estate has problems that needs to be fixed. If you have expertise in plumbing, drywall, and circuits, you can solve most problems, if not then you have to hire a expert which costs money.
8. The real estate market is cylindrical, the market goes through cycles and this cause only investor who have been investing for mutliple cycles ie-40 years or more to be fully succesful.
9. Real estate returns just match inflation. Most of the time real estates returns match inflation. Even though rent is added most of the time real estate is about inflation or slightly higher than inflation.
10. Real estate is not diversifed and you are depenedant on local market to discover which markets are actaully profitable and the risk is not hedged.