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  • Matt Linden

How to Find a Good Real Estate Agent (3)

Just today I saw a post by a real estate agent, who touts his 40 years of experience, saying that he disagrees with investment diversification and recommends that folk go all in on real estate investing. Why not - he makes his money on commissions from folk investing in real estate. He gave the example of a $50,000 property he bought 40 years ago now being worth $400,000. Because I'm a firm believer in diversifications and a successful stock investor, I knew right off that didn't sound all that impressive. A 30 second web search showed me that $50,000 invested in the S&P 500 40 years ago would now be worth $3,300,000. I do understand and use the fact that real estate has a great feature of leverage - one could have bought that property for perhaps $12,500 down payment (plus closing costs). That $12,500 would have grown to $825,000.

That agent doesn't understand the power of investing in simple stock index funds. That agent probably doesn't understand why one would still invest in real estate if the stock market beats it so handily. (I do - contact me - but the short story is tax benefits from paper loss deductions.) That agent is probably not going to be honest about all the work in managing a rental property. I will be.

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