Maybe you looked at the people with below average experience with securities, and I looked at the above average securities investors/traders.
Yeah, you do not need to go to Top 5 MBA Finance school with CFAIII and/or CMT to be an market expert.
Again, cap gain isn't the only way to play market. You can get a consistent income from market as well with less capital than real estate.
Don't get me wrong. People around me do all sort of deals besides securities.
Some people make more during Bull market, and some just do better during bear market.
As you mentioned the 2000 internet bubble, I've seen lots of people who lost majority of their $$. In contrast, I've seen people making tons of $$ by shorting and puts on high earnings multiple stocks to nearly zero.

I recently had a failed acquisition on private equity deal up north. I do value the residential/commercial real estate as well, and know the perks.
Although, I am not a "private capital/equities" or "Leverage Buyout" expert, but I do know some enough to make some $$ for a company I use to work for when I was in late 20s.

I believe your friend is definitely better off invest heavier on residential/commercial real estate than a market.
I do know a kid who is in grad school at CU, and he is making about same net on selling out-of-money puts (again lotto options) with far less capital. He does that every month to collect premium.

Your friend doubling his retirement in 2 years on a real estate from bank's leverage is impressive.
Apple with ~550% in 5yr average is impressive? I am sure people who ONLY invest in real estate would say it is LUCKY.
Forget 550% in 5 years. Would you believe me if I told you that my wife had approximately 2000% CALCULATED (no luck) return her retirement within 6 years off of her ESPP/401K alone?


To reply your last statement. Why are you comparing a real estate to a DJIA? I am sure you know better.
Indicies or Index funds ETFs are for people who just want to have a ride to the market. S&P500 with < 50% gain?
Even a no brainier stocks like NFLX or BBY with LESS THAN 2.0 risk multiple had over 150-320% gain YTD. Oh yeah. that is just on Investing LONG without making INCOME off of writing call/put.

I think people should compare $X/yr income real estate investor to $X/yr income securities investors. Not $X/yr real estate investor to Negative $Y/yr securities investors.



Quote Originally Posted by ChunkyMonkey View Post
Not an analysis or market expert like many claims to be, but I do comparison in my real experience after losing 180k over night during the internet bubble and making it back up in short time in real estate. Fixing door knob etc is property manager's job on each property. You are still thinking capital gain, which I used to too. Forget the capitalization, instead, think dividend. A fair comparison in your post would be between a daily trader and a fix and flipper (both are high risk imho).

Here is another recent real experience of my long time buddy who I finally convinced to leave the market... He had close to $100k in 2 different 401k - which had doubled the past 10 years or so. I convinced him to transfer them into self directed IRA account, since he insisted on not cashing out, or paying the capital gain and get over it.

So he used the 100k in the new self directed IRA to put down payments on 8 different rental units. With today's low low rate, he nets roughly $5000 a month after mortgage, insurance, some HOA, and 8% in property manager fee.

The math is extremely simple, he goes from doubling his retirement in 10 years, to doubling it in 2 years thanks to bank's leverage. Most of all, these are real asset that leverage against inflation, unlike paper money or stock. By switching his portfolio from the stock into housing market, his growth is going 5x as fast. Now, he is learning his mistake. If he wouldve cashed out his 401k instead of going IRA, he doesn't have to pay 30% in the future whem his portfolio will be much larger.

Now keep in mind, in rental units, you must ignore 'capital gain' as everything is for long term (traditional market trend shows that your house will gain 100% of its value every decade or so http://2.bp.blogspot.com/-xy8GnkXGKB...3-jan-2013.png). You can compare this part with stock market (dow jones was at 10000 in 2003 and now barely passed 16000 - 60% gain average).

Of course, most stock brokers/ daily traders love to argue that his picks are much higher than average. Hell, I used to do that during the mid 90s..until the crash and got schooled by a college friend when he showed me his 300 rental unit portfolio. Best part is, anyone with a descent credit can do the exact same. Those days of staring at 3 CRTs are long gone.. !