On Real Estate – Good Investment or Lighting Money On Fire?

Do you own a home? Do you rent?

If you rent, have you ever heard someone say to you – “Why don’t you buy something? You’re just throwing your money away!”

I bet you have.

If you’ve read my post about becoming accidental landlords, you’ll know that I am a little burned out on real estate. My husband and I were dating at the time when he bought a condo and we were both so excited about it. He was going to be a homeowner! And it was such a good investment! We were totally planning for our future, being all adult and shit.

Well, not a year later the housing market crashed and we were left holding the bag on a condo that was super underwater. Oh yeah, and it turned out the HOA had been mismanaged for a long time so a lot of the basic maintenance that we would expect to be available to us was just gone.

It was not a good time.

We’ve been renting this condo out for the last few years and we’re now at the point where we can sell it without losing too much more money. It literally only took 10 years for us to put enough equity into the property that we can finally get out from under it.


Can you tell I’m a little crabby about this?

It’s no one’s fault of course. That’s just the hand we were dealt from playing the real estate market game. It happens.

But here’s the thing. No one tells you it happens. Because, historically, property values have increased year over year.

Now, that alone should have been a red flag because things just can’t keep increasing in value forever and ever. It’s not sustainable. And now we look back at the housing market crash with our 20-20 hindsight and go, “Oh yeah. We totally fucked that up.”

On the other hand, though, we’ve since bought another house. A house that we could afford and that we currently live in and that house has appreciated since we bought it! Awesome! We actually have equity in a home. It’s a good feeling!

But when you look at that equity and you start to factor it into your net worth calculations, you kind of have to take it with a grain of salt.

Zillow likes to tell me that my property is worth at least $30,000 more than what I think we could reasonably sell it for. In fact, Zillow makes me feel like I’m rolling in the dough, because if I factor in the value of my home and the fact that just the act of paying down my mortgage makes the equity in my house go up year after year, it appears that my house is worth a lot more than it is and it appears that my net worth is a lot higher than it is.

Realistically, though, we should remember the lessons we learned during the housing crash and we should not trust in a real estate investment to mean long term gains for us.

I get especially wary when I see bullshit like these ads on TV for mortgages you can apply for via an app on your phone! Or promises that you’ll get a mortgage in 30 minutes or less.


The housing crash occurred, partly, because people were overextending themselves. Banks and Financial Institutions were giving loans to people who really couldn’t afford them. And regular joe’s were talking themselves into accepting these loans because real estate is a good investment! They’ll make money right away! Easy peasy!

That didn’t happen, though. And lots of people lost their homes.

So why are financial institutions offering mortgages in 30 minutes or less? And why are people using apps to apply for mortgages on their phones!?

You guys, none of this makes any fucking sense and it should scare the crap out of you.

So, no. I don’t trust the real estate market as a huge opportunity for investment and financial growth. At least not at the level that an everyday person like me would be involved in the housing market.

There are obvious differences if you purchasing homes specifically for rental income and you’ve done your research on whether or not the rental market can support the price you’d need to get depending on the loan you’re taking out for that property. But that’s not what this post is about.

The takeaway you should get from this post is that, for an everyday person, real estate “investing” should be taken with a heavy, heavy grain of salt. Particularly when it seems that the U.S. and the lending institutions offering mortgages to people haven’t really seemed to learn a lesson from the crash. High risk mortgages are still being given out and we should really be worried about that!


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