Real Estate Is A Hedge Against Many Bad Things In Life

In the great debate between real estate versus stocks, I give a slight nod towards real estate. When I was young, I wanted real estate because having it felt like I had arrived. Now that I'm middle-aged, I want real estate so I can provide a stable environment for my family.

After taking over 500 long walks around my neighborhood since 2014, I've made a very interesting observation. All the adult kids still living at home seem to be men, none are women. Within a four block radius, I often see between 4-6 adult young men waving goodbye to their moms or washing their cars in their parents' driveway.

This, in turn, made me wonder, where have all the adult women children gone? What are the reasons men seem more destined to live at home with their parents than women? Perhaps maturity is what drives women to be more independent.

This observation worries me because I have a son. I want him to feel the joy of independence well before he's 30 years old. If he still lives at home playing video games all day into his 20s, as a father, I will feel like a complete failure.

But sometimes, no matter how hard we try, we're still destined to fail and there's nothing we can do about it. Therefore, I got to thinking about how real estate can be used as a hedge against many bad or suboptimal situations. Here are 10 things I can think of. 

Real Estate As A Hedge Against Bad Things

Here are some things owning real estate can help protect you from.

1) Your kid slacked off in school.

Let's say your kid did poorly in school because he was not pushed to study. As a result, he's unable to get a job that pays enough for him to live on his own. Real estate acts as a hedge against a difficult life for your children.

You wish you had been more present in your kid's life growing up, but you had a demanding job or simply wanted to slack off yourself. Having real estate saves your son from living on the streets.

2) Your kid is simply not very intelligent.

The law of averages dictates that most of us will have average intelligence. But some of us, through no fault of our own, will simply have below average intelligence. If you combine below average intelligence with poor judgement, you might get into some serious trouble.

For example, growing up I consistently demonstrated poor judgement by hanging out with the wrong crowd. We smoked, drank, shoplifted, drove without driver's licenses, fought, you name it, we did it. As a result, we got into trouble at school and with the law.

Luckily I had already gotten into a decent university before I got into more serious trouble. I decided to do my best in college and was given a second chance by a woman named Kim Purkiss whom I will never forget. Thank you Kim!

I could have easily ended up living at home with my parents, working minimum wage jobs for the rest of my life if it wasn't for my lucky breaks. As you can tell from my writing, I have very average intelligence. And I already shared with y'all that my SAT score was mediocre in a previous post.

Real estate is a hedge against not getting a good job after high school or college.

3) Your loved one has a disability that makes life more difficult.

We have a neighbor who has a daughter with severe cerebral palsy. She is confined to a wheelchair and needs care 24/7. Bless her and her parents.

While they do not live in the house next door full-time, their 29 year-old-son who cannot find a full-time job does. They come to visit three times a week to water their plants and clean the house. They live about an hour away in a larger house that's all on one floor in order to be wheelchair friendly.

I pray that none of us ever gets into a debilitating accident. But if we do, hopefully, we'll have a stable home to come home to. Real estate acts as a hedge against disabilities and potential future accidents.

4) You need a break from your marriage.

Some marriages might benefit from an extended break instead of a complete break. Sometimes a one or two-week vacation from each other is insufficient time apart to prevent a divorce.

If you had only own one property, you'll likely see each other daily. As a result, bitterness might fester and grow. However, if you owned another property close by, you could temporarily live there until you stopped getting on each other's nerves.

I know one couple who ended up living apart for six months to heal their marriage. Although the couple forwent about $25,000 in rental income, they saved at least $30,000 in lawyer fees, not to mention the breakup of marital assets.

Real estate acts as a hedge against family instability.

5) You get a divorce.

If you can get a piece of property in a divorce, you'll be OK. But for some couples, only one may get the house because there might only be one house in the portfolio. The person who doesn't get the house may have a much more difficult time surviving.

One person I know has had to move three times in the past five years because her ex-husband got the property. Sure, she got some investment assets, but it was not enough to cover all her living expenses without a serious drawdown.

Their son, at one time, used to be able to commute just three blocks between his parents' respective apartments. Now, he needs to spend an hour to get to his mother's place because she's had to move to a cheaper location. This is called bird nesting after a divorce.

After not working a full-time job for 13 years, she has had difficulty covering her basic living expenses with freelance work. Please be careful not working for many years. As I discovered recently trying to get a job after years of early retirement, it's hard!

6) You get fired from your job.

If you lose your job, you are on thin ice if you ever need a new place to live. Forget about buying a place when you don't have W2 income and need a job. You are dead to banks. Refinance before leaving your job please.

Few landlords will rent to an unemployed person. But if you own your home, so long as you are paying your mortgage, if you have one, you'll be fine. Even if you stop paying your mortgage, you probably have at least a year before the sheriff comes knocking.

Real estate acts as a hedge against getting kicked out of your rental due to a job lose.

7) You lose a parent.

Couples rarely die at the same time. When one parent dies, the surviving parent is often in a precarious situation because of caregiver needs. Therefore, to provide care, you may want to have your parent move in with you.

If you don't own property, then you may lack the flexibility of adding a new occupant on the lease. You may also be restricted in the types of things you can install in the property to make the property more handicap friendly.

Real estate acts as a hedge against taking care of a parent with nowhere to go.

8) You have a friend in need.

You may have a friend who just went through a bitter divorce, lost her job, or experienced some other difficulty on this list. If you have an extra property, you can lend it to her rent-free until she gets back on her feet.

Sure, letting her to sleep on your couch is another possibility if you don't have a spare property. However, your friend might also have children or a partner who would want some privacy. Likewise for you yourself I'm sure. Rental leases often don't allow an extra guest for an extended period of time.

9) You or your child becomes depressed at work.

Sooner or later, we all lose interest in our jobs. But most of us have to gut it out due to a lack of alternative income streams. Quitting your job to become a travel blogger or an artist is probably not going to pay the bills for the first several years, if ever.

However, if you owned a portfolio of rental properties, you might easily hire your melancholy son or daughter to manage them for you. What a gift to be able to throw them a lifeline. By giving them an important responsibility that you may no longer want, you could create a win-win situation – a sense of pride for your child, more leisure time for yourself.

Heck, even you might get depressed at work too. If you had a large enough rental property portfolio which could pay for all your living expenses, you could decide to retire early, become a part-time property manager, and do something you’ve always wanted to do.

10) Rents shoot through the roof.

Renting is great for the flexibility it provides. But if you end up living in an area for more than five years, renting is usually a losing proposition due to inflation. Owning real estate is not only a hedge against rents shooting higher, but a concentrated bet on rents shooting higher for greater wealth.

Recently, I was talking to the owner of a sandwich shop which I have been patronizing since 2001. He told me his biggest regret was not buying his building back then. If he had, at age 68 he wouldn't still be making $10 meatball sandwiches.

The return on rent is always -100%. Real estate acts as a fantastic hedge against inflation.

Real Estate Is A Hedge Against Many Bad Things In Life

Be Neutral Real Estate At The Very Least

Life is messy. The good times never last forever. We will inevitably face some sort of suffering that will challenge our faith. The more people we bring into our lives, the more opportunities for suffering.

By owning at least one piece of real estate, we're able to ride the ebb and flow of the real estate market. Real estate acts as a hedge against life's many difficulties. Our piece of real estate can provide shelter from so many of life's unpredictable storms.

As long as every one of us has a place to live, surviving is much easier. Relatively speaking, food and clothing are inexpensive. Once we have our basic needs met, only then can we go on to do great things.

Of course, all the benefits of owning real estate are predicated on being able to actually afford the asset over the long term. If one is too stretched, then owning real estate can also be a tremendous burden.

As I grow older, I no longer see owning physical real estate as a potential moneymaker, but rather more as a life facilitator. For potential profits, I'd much rather invest in alternative real estate assets that have no hassle. I suspect you'll feel the same way as you age.

If in 25 years my physical real estate portfolio appreciates in value, then great. But in the meantime, I'm going to try and use my properties to provide the best life possible for my family.

Suggestion And Questions

Invest in real estate passively. Check out Fundrise, the leading real estate crowdfunding platform today. They have a variety of real estate funds and deals to allow you to diversify your real estate investments and earn income passively without the hassle of managing tenants or maintenance issues.

Readers, what are some other non-monetary benefits real estate provides? Do you think real estate is a hedge against many bad things in life?

85 thoughts on “Real Estate Is A Hedge Against Many Bad Things In Life”

  1. Hi Sam,

    Just want to say thank you for your website. I discovered it a few weeks ago with your article about whether or not to sell a rental property. Through your posts, I’ve learned so much! I particularly appreciate that you’re explaining the process of building wealth in a way that someone with minimal financial mentorship/literacy can understand. We have almost diametrically opposite early adulthoods. I was raised by hippies who didn’t have or understand money, I under-earned until age 40, had some credit card debt, and didn’t start investing in an IRA until 2009. But, from your site, I’ve learned that my purchase of an $86K fixer 3 unit apartment building in 2011 was a lucky risk. Today, I have equity. I needed to tap it in 2020 to help my parents living on limited social security, but I used half of it to upgrade the building, which has a positive cash flow, and the other half to start paying their mortgage (to save their house) in a fast appreciating suburb of NYC. We have a life-estate, so I now technically can add that property to my net worth, which at age 49, is $600K. Luckily, I also like my job which pays $130K. I am stretched right now, but through your site I realize, I’ve made some good choices and it could be worse. My IRA is $200K through the 2021 gains. Now, I see my next step is to use the current high interest rates to put bonuses into CDs and expand my liquidity. It’s easy to make bad choices when no one is guiding you, so thanks so much for confirming that I’ve made some good ones and can continue to do. Happy Thanksgiving!

    1. Financial Samurai

      You’re welcome! Happy to help and have you as a reader.

      You may also like my podcast on Apple and Spotify as well. Please subscribe and leave a review if you do.

      Happy Thanksgiving! And congrats on all the financial progress!

  2. I’m no investment expert but I agree that real estate is a huge safety net. Or at least it can be if not over-leveraged.

    My wife and I own our home outright and and two rental homes outright as well. I never thought about appreciation when I bought them but in my area the appreciation has been nothing short of staggering. The vacancy rate around here hovers at a little over zero and rental rate increases are frequent and big. We make a significant amount of our income from them since there’s no mortgage ( although taxes , insurance, and maintenance eat an incredible amount of money)I have no 401k whatsoever. I’m a teacher so I do have a modest amount of money in my defined benefit program. I’m 54 and can qualify for early retirement this summer if I wanted to. Between that small pension, unless I decided to take it as a lump, our rental income and my wife’s home business, we would make around 5k a month with no bills other than the ones no one can get out from under.

    I know that 5k is not a fantastic amount of money. But it seems that each year teaching gets a little harder. They pile on a little more work. Become a little more unrealistic in their goals. The technology has gotten to the point where the kids easily know more than I do about many platforms. Fortunately for me, I’m a popular teacher with kids and parents and my test scores are always among the highest in the district. Sometimes the highest.

    All the same I doubt very much that I’ll make it to 65 before calling it. My real estate investments are my saving grace in all this. I know that if and when the day comes, I probably won’t be on the street. I never took the time to educate myself about the stock market, probably to my detriment but I think I’ll probably be fine.

  3. Clarisse Haack

    “However, when I’m underperforming, I like to make myself feel like a loser in order to keep myself hungry.” It’s the little comments that make you the best #real

  4. I’m kind of in the similar situation as described by you Sam. I recently moved back from another province; not because of financial means but due to family. My family is well off and I currently stay in the basement as I see no point on moving out into my own place since financially I can be better off that way, but I am very intrigued in owning real estate. For one thing, in my current market I can afford a condo or small house to rent it out completely and get the renters to take care of my mortgage BUT I can’t seem to reason with myself doing so, since renters paying off my mortgage doesn’t equal to making me money and yes I do understand I’ll be the owner of the property. Instead, I feel like I should be using that down payment money to invest in a property in Vancouver or Toronto where my friends are telling me their condo went up in $20,000 of market price within half a year of buying.

    Nevertheless, I completely agree with owning property but just not sure which way would be the best to go about it. Yes living at home do have it’s problems but as of now I find it making more sense since I have to take care of my parents and financially wise it’ll help tremendously in increasing the speed of reaching FIRE but I also would like to put my money to work.

  5. Interesting observation regarding sons vs. daughters staying at home.. I was thinking of all the 4 kids of my parents ( 3 daughters one son). My brother was the one who always insisted on staying close to my parents ( 45 minutes max, even during college). Financially he does much better than all his sisters ( made it big in silicon valley) but I could see him having an easier time staying with my parents if he had to. My mom would drive me and my sisters nuts and probably would expect to do a lot of housework, but probably expectations from him will be pretty low. Yeah my sisters are out of state and I live an hour away

  6. Real estate was the ultimate hedge during some dark times in my life.

    When I filed for divorce, I was able to move into one of my rentals and rebuild my financial life. At the time, I had built a portfolio of 22 units as a side hustle.

    It was a nice backstop since my ex-wife got the house (plus a nice payout) while I kept those “nuisance rentals.”

    She never like me dealing with tenants and toilets.

    I like to joke that she kept the golden egg while I kept the goose laying those golden eggs!

    When the stock market crashed in 2008 my real estate picked up the slack again. My financial advisory revenue dropped 50% while my rents kept climbing throughout the crisis.

    Throughout both these dark periods, I kept buying small small apartment buildings and can easily retire anytime.

    While being a direct owner is not for everyone, it sure has helped me navigate the inevitable setbacks of life.

    Plus, college for the kids is easily funded from rental cash flow.

  7. it’s just before 6AM on a Sunday morning in Cupertino, decided to read all the posts on this article as have been a long time reader of Sam’s stuff. Have been living in the NorCal area since the ’60’s, my parents moved here from Europe my then and moved to the SF Bay Area right after I was born. Move forward, parents paid for BA degree, worked on a cruise ship to get funds for MBA at St Mary’s, corp paid for MS in IT. Married an Asian wife in 2000. Little did I know that her family was loaded, she and her family was humble. Doesn’t matter, we drive older cars, don’t live it up but travel A LOT. A lot of our neighbors drive Tesla’s but complain that they have to work (both hubby and wife) to pay for all their stuff. “Keeping up with the Joneses?” We laugh, have no debt and own 3 properties outright, have a couple of million in IRA/Roth. Other assets but we live frugally…
    We don’t need to show off. We could but really don’t care to. I love cars and could buy whatever I want in cash but have no desire to, would rather travel and see the world.
    Love your work Sam

    1. I love that the wife’s only defining characteristic when they got married is that she’s Asian.

      1. Sorry Phil. was early…. My wife is asian but has a lot of other awesome characteristics, including giving birth to my 3 awesome kids and putting up with me!!

    2. In the meantime, working full time does not allow me to be an active landlord, so I am happy with my $105K in Peerstreet generating good income. And after your recent post about RealtyMogul has got me interested because I want to diversify. Peerstreet is predominately single-family homes, whereas RealtyMogul does NOT invest in single-family homes, so I think they would complement each other in my RE holdings. I have an account but have not funded it yet.

      1. Curious to know how much income a month does your $105k make? I own real estate with my wife but I’m now considering other RE options.

    3. Thanks for reading all these years! Now I’m curious, how loaded is loaded? :-) And how did her family create their Wealth?

  8. The family dynamic is a bit different in other cultures where the children may live with parents until they have children of their own. This is a typical scenario back in the Philippines especially in the less affluent areas.

    It’s a form of househacking. As long as the children don’t stay home and play videogames all day.

  9. Questionable Existence

    I can name at least 4 families off the bat that follow the phenomenon you’ve been witnessing, Sam. This includes my immediate family (me, not my brother), extended family/relatives, and friends. I believe I live in your neighborhood, Golden Gate Heights.

    Everyone has their own reasons, but overall what Anthony and others have said about Asian families rings true.

    First off, I don’t think it’s always necessarily that the women are more independent. An example would be my aunt’s family. She has two adult sons that have their own wife and children now. They STILL have never moved out of my aunt’s home and my aunt moved out of the house for the two families to live in government housing. My aunt’s youngest daughter moved out because she married well and her husband bought TWO homes in San Francisco.

    I think it’s easier for women to marry up, although there are exceptions (me, I got lucky – now living in a home we bought NOv. 2018 last year).

    My parents aren’t wealthy, but they were always willing to take care of me and provide a safety net for me after college. After undergrad, I was still ambivalent about my career, even though I had options (biotech degree, pre-health/pre-pharmacy). I took classes at a junior college in Sacramento while living in my parents’ second home there. I then made a complete switch to accounting and went to USC for a Masters degree in accounting. Took a year to get my degree and came back. I started working for a Big 4 accounting firm and decided to still live with my parents in the Golden Gate Heights home and make a 50 minute commute to my San Jose office (not the best idea).

    Fast forward several years and I discovered I wasn’t a good fit to work in corporate. It took a lot of exploration before I got to where I am now, trying to start my solo business blogging while my wife still stays in accounting. So basically, I’m now a stay at home spouse, like you. This kind of counts as early retirement? I have the flexibility to do everything or anything on my own terms, and in charge of my own time — as long as my wife’s working (hope to change that one day, too).

    Another story, my two male cousins that live in outer Sunset, one graduated from SFSU and works in finance/equity research. He’s about 4 years older than me, now 36. The other cousin is studying engineering at SFSU. 34 years old. He’s taken over a decade to obtain his degree, and still working at it. He worked at Kelley-Moore Paints for many years, but recently quit. They both can afford rent, but as an Asian family they think it’s wiser to save money living at home until they’re married. Their parents are low wage workers, my uncle works at the airport as a chef, but they’ve amassed a lot of real estate and paying them off by renting them out for many years. One day those properties will be passed on. They have one house in Stockton where they began. One house in the Outer Sunset and one house in South San Francisco.

    Another one of my mom’s side’s relatives, three cousins the eldest daughter moved away to Socal to be a nurse, now married. Second child, a guy, took awhile to find his path as a nurse – about my age, starting his career now but worked many years at Starbucks. The third child, a girl in her mid 20’s, just finished physical therapy school at UCSF. The two younger children lived in their parents’ house a block away from the family described in the previous paragraph. So, in this case, both men and women lived in their parents’ house.

    Next comes friends, all Asian families: another family living in the Outer Sunset. Three adult male children. Oldest child, mid-thirties, works as a Muni driver. Second child, a lead nurse at UCSF making six figures and can’t afford a house in SF. Third child, my friend who’s my age works in e-commerce (buys things at garage sales, flea markets, estate sales, etc. and sells on E-Bay). Makes about six figures and he debated moving out, but it’s a matter of living almost rent free (he pays below market rate to his parents) with someone he knows (his family) or takes the risk of moving in with strangers and paying rent. He can’t afford to buy a house yet, either.

    Next friend, a guy, lives in the Richmond district he worked for many years with a Santa Clara company in IT security. Now he’s in transition looking for a coding job. He’s been keeping busy teaching coding and working on other hobbies, but basically on a small sabbatical at the moment. He could’ve paid rent while working, but chose to live at home to save up for a home.

    Personally, I encountered colleagues with an American perspective like yours and believes children should be out of the house soon after college, no excuses. I felt judged for being less than capable, but I still kept the mentality that I’m paying my dues for a better future. Some of my parents’ non-traditional Asian friends told them they should cut the strings on me long time ago, but they didn’t listen.

    Now, starting since I left corporate accounting early 2017, at the age of 30 I haven’t had to work another miserable day and, unlike many of those that judged me, I’m a proud homeowner now.

    After hearing all that I’ve said, you be the judge. All in all, I think it’s a Asian-American cultural clash. There’s definitely a bit of an identity crisis being a second-generation Asian-American.

    One thing I disagree with that someone said: you don’t have to be an ATTRACTIVE female to marry up. I don’t deny that there are trophy wives out there, but there are plenty of average looking women that marry into a roof over their head.

    I also want to reiterate my belief that Asian-American males aren’t incapable people without life-skills just because they live with their parents until their late 20’s, 30’s, and even 40’s. You can see in SF that Asians as an ethnic minority are in the majority as a landlord/real estate owners. While a majority of homelessness in SF is from people not of Asian descent (caucasian, black, etc.). This is as a result of the cultural clash of beliefs.

    If more families stuck together like Asian families, there would be less homeless on the street which I’m in support of. For the sake of my future family and security, I’d gladly come off as an overgrown manchild living at home. Judging is judging, happiness is about overcoming fear of other people’s approval.

    1. Thanks for sharing your story and the story of the other people you know.

      So perhaps living at home in your 20s 30s and 40s is it acceptable thing for Asian Americans in the San Francisco Bay area now days? I do this see this a lot, along with many of the adult male children driving very fancy cars. I guess this is where I find it a little bit ludicrous that you can drive a $60,000 BMW but still live at home with your parents.

      Congratulations for retiring early and having a working spouse! That’s a great scenario.

      BTW, I’m Asian-American. Also part Hawaiian, where are multi generations living under one roof is common.

      And yet, I want my boy to live by himself and sleep on a couch if he has to in his 20s to learn some hardship and grit. I think it’ll do him some good in the long run.

      Did you buy your single-family home by yourself, with partial help from the rent you saved? If so, we’ll done!

      1. Sorry for the poorly grammared rant I posted. The introduction to your post hit home and felt pretty personal to me. I have half a mind to turn my comment into a blog post (over 1k words)!

        I’m a long-time reader, first-time commenter. Love your posts.

        None of the people I know or mentioned drive ridiculously priced cars, with maybe the exception of my wife (we share a car). We have a 2017 TLX, a mid-level luxury in the range of $30-35k. To be fair, I tried to convince my wife to buy a more economical car following your 10% rule but she and my mother-in-law felt she deserved it. Paid in full with cash, no financing like Mr. Money Mustache prescribes.

        Most of my friends and relatives house hack and live together out of necessity because some of them are low wage earners. The ones that earn a bit more want to save up for a house.

        I can’t fully speak of other peoples’ situations. However, living at home for myself had its pros and cons. Yes, you do have more disposable income and although I saved a pretty decent amount, I also spent a little more freely, too. The downside is living under your parents’ rule. Some Asian-American children do it out of necessity, but I did by choice.

        I had my own set of challenges living at home. It was no walk in the park, but I played the long game and it paid off on a reasonable timeline.

        To answer your question, buying our SFH was a family effort. The downpayment was a combination of contributions from my dad, my mother-in-law, my wife, and I. A home in the Bay Area today would be unaffordable for any of us on our own. My wife and I are making the mortgage payments.

        If I had been more career-oriented and less family-oriented, perhaps I could have saved more for the house. Even before I read your posts on time getting more valuable as we age and big contributors to happiness are time with family, time to self, etc., I very much lived and valued those beliefs.

        I graduated from grad school at 26 and started working then, but more or less still following your above average net worth infographic.

        Big 4 accounting firms pay less than the investment banks you used to work for, but I managed to reach 100k compensation, including bonus, after 4 years of working (then retired to eventually find blogging as a business). My wife is younger than me (27), and just hit 105k base salary after about 4 years, as well.

        Do you know anything about the Silicon Valley real estate market? I bought our house based on some general research and some instinct. You say you only have average intelligence, but I don’t have the knack of doing your real estate analyses and calculations.

        We’re in the Alum Rock area 5-10 minutes from downtown San Jose. The first major tech company, Adobe, double-downed and opened more offices in the downtown area. Not sure if you’ve heard about Google opening an office in downtown SJ, as well. Google effect? However, I heard from my Google friend that the office is smaller because only contract workers work there.

        I’ve also read that the downtown area should be looking to liven up as the Silicon Valley millennials are looking to live in an actual downtown environment. Lastly, BART stations are in construction in San Jose, including a station near our house.

        Our house itself is only a modest 1k sq. ft. 2 BR/2 BA. Looking to improve it soon with a home office and convert the garage into 2 BR. We have a large driveway to park cars.

        It’s not gentrified yet, but I’ve been keeping bullish expectations. What do you think?

        1. What I see is that inventory in the San Jose area is up 100% year over year and prices are flatlining or declining. But I’ve got to believe that lower mortgage rates and the lockup periods expiring for thousands of tech IPO employees starting in November will create for a frenzy market again in 2020.

          To answer your question, buying our SFH was a family effort. The downpayment was a combination of contributions from my dad, my mother-in-law, my wife, and I. A home in the Bay Area today would be unaffordable for any of us on our own. My wife and I are making the mortgage payments.

          I’d love to get more insight on this, as a father now trying to look ahead into the future with my son. I’m NOT judging you for your decision and lifestyles. I just want to know more of how you feel about this so I can be a wiser father down the road.

          It sounds like you had not problem living at home with your parents as an adult after college. Do you feel any type of guilt or bad feelings for having your dad and mother-in-law help with the downpayment? I know it’s pretty common here in the Bay Area given the prices. Just wondering how you feel about getting that much financial help as an adult?

          Do you feel that living for free with your parents and getting financial help for your house in any way DEMOTIVATES you to hustle, earn, etc? You mentioned you left your job shortly and going on this blogging route now, which will be fun. But what if you didn’t have such assistance. Do you think you would have kept on grinding?

          Fast forward several years and I discovered I wasn’t a good fit to work in corporate. It took a lot of exploration before I got to where I am now, trying to start my solo business blogging while my wife still stays in accounting. So basically, I’m now a stay at home spouse, like you. This kind of counts as early retirement? I have the flexibility to do everything or anything on my own terms, and in charge of my own time — as long as my wife’s working (hope to change that one day, too).”

          Do you have enough investment income to cover your living expenses + blogging income if you consider yourself an early retiree? Or are you guys mainly living off your wife’s income now?

          My fear is that I buy my boy everything he wants, and then he loses focus because he loses hunger. But perhaps that’s a good thing? To live the good life and not have too much financial or career stress?

          1. Questionable Existence

            I spent a lot of my 20’s and now early 30’s contemplating life as a retired 60 year old man would, but the glamour of ticking and tying accounting workpapers to financial statements lost its appeal. Benefits we early retirees have, eh?

            No guilt associated with accepting large monetary gifts as I know my parents invest everything into their children. They live very frugally, spending only $25k a year, including $5k property taxes. How is that even possible?!

            While living at home I did my best to conform to that lifestyle and now that I’m on my own as a homeowner, I believe I have similar habits. Growing up, my dad was always pretty careful about giving us money or material gifts. No allowances like many American families do. We do chores, regardless. No video game consoles or the coveted electronic devices for Christmas, or even at all, because devices as a babysitter are hurtful to raising a child even as of today.

            My dad was a CCSF college counselor, so no investment banker income for him. He was the main source of income. Yet, he always gave us enough so we could go out with our friends. Enough so that we’d have to make tradeoff decisions.

            Speaking about my brother and I as adults, and just now discussing my wife with her mom, we all were raised so that we don’t have financial expectations of our parents. We know that it’s our parents’ personal goals to help us.

            It’s hard for me as a non-father to give you advice since all of it would be theoretical, but based on my experience with my own father as a son I’d say foster a close relationship with your son. We talk as if we’re best friends, about anything and everything. The type of friend that rides or dies together. Not the friend that bails you out from jail, but the friend that goes to jail with you. During our recent trip to Asia, my dad said a similar thing but in different words.

            A wise father doesn’t mean you’re a perfect father. In fact, my dad’s certainly not without his own character flaws. But I appreciate him to the maximum.

            He always emphasizes that he doesn’t have much left to give, but yet he gives something anyway. Makes me wonder if he’s practicing your idea of stealth wealth. He showed me his very modest stock portfolio once, but I stil have doubts if that’s his entire net worth.

            Most of all, he always repeats that there won’t be much or any inheritance for my brother and I. I’m guessing the SF house and a small stock portfolio. He always says his inheritance to us is our education. That’s why he paid $100k each towards my brother and I’s year at USC. He also paid about $100k to help my brother pay down his medical school loans. He still has hopes for my brother to go back and specialize, too!

            Financially, it’s never equal giving to my brother or I, but none of us fuss about it. Dad always says the honey pots almost empty, but he offered a 5k gift to help finance our upcoming wedding ceremony and receiption — which is really generous.

            One thing of note is, my parents’ attitude towards me in particular haven’t changed even after moving out and getting married. Unless I start drawing clearer boundaries, it’s hard for Asian parents to stop viewing us as young children.

            I always had that knack for hustling and dreams of making it big with tons of money one day ever since I was a kid, regardless of my parents’ safety net. After growing up some, I realized money only matters to a certain extent. Beyond that, there’s more to life than that. I was always distracted dreaming bigger entrepreneurial dreams rather than being a good worker ant in corporate.

            I was given feedback by a former colleague that I give off an impression of being a younger or only child, because I treated my career as a game rather than a fight for one’s life like most others. In fact, my parents’ intentionally raised me that way and not want to worry about money and survival. They just wanted me to enjoy the thrill, grow, and thrive.

            I just want to say that by raising me like that it really opened a lot of doors for me and people know it.

            Bottomline, I believe there’s a way to raise your kid without a silver spoon in their mouth yet set them up with all the tools to succeed in life.

            I have been pondering this myself. I was brainstorming on how to pass my estate to my children one day, especially if I amass a sizable fortune. Wondering if there’s a way to set up a trust that passes everything on to them, if they learned to make their own first million, for example. If not, keep it for future generations or charity.

            By the way, I actually asked my dad if he knows a Sam in his 40s who used to be in finance because my dad plays tennis everyday at JP murphy and Golden Gate Park, too, but he said no. You should link up and play with him some time and maybe he can share with you how it was raising me as an adult.

            He still says there’ll always be a place for me back home, if I ever need it. So say I get divorced and lose my house, there’s that.

            1. It sounds like you and your dad have a great relationship. That’s awesome and the best thing I can hope for.

              The thing that’s about to me and making you do chores. Making kids do chores and something that continuously stands out in literature I read about parenthood. I want to make my boy pick the weeds with me.

              I don’t think I’ll have a problem explaining things thoroughly to my son I’m talking about why things are the way they are.

              To your question, set up a revocable living trust. I would do so when your wife is in her third trimester or soon after your child is born. You can make it so that he or she doesn’t get any assets until after a certain milestone.


              Btw, You’re welcome to run a guest post on my site if you want. Just need to formulate your timeline and thoughts a little bit tighter.

          2. Questionable Existence

            “Do you have enough investment income to cover your living expenses + blogging income if you consider yourself an early retiree? Or are you guys mainly living off your wife’s income now?”

            RE: Still working towards the FI number. Living mainly off wife’s income, but I do contribute a material amount (more cash flow each paycheck period, larger budgets for different items on our budget) to our annual income. Just not enough on its own.

          3. Not sure why you think lower rates are going to do anything. They’ve been <4% since March, if they haven't done anything since then, during the hottest time of year for home sales (a mild shot in the arm nationwide, but still tepid, and nothing in San Jose), I don't know why you think that will change heading into the slower sales season of the fall.

            Likewise, most of the IPOs are hype-driven for companies with little path to profitability, reminicsent of late 90s/early 00s. Most of these stocks are sinking like a stone after the initial hype wears off.

            Even Zillow is projecting a fairly significant 1-yr decline of ~7% in San Jose, and they're quite biased and often overly bullish (their projections have tended to overstate reality):

            With CA's mass migration out, CA real estate right now looks like a bad bet to be buying at the peak of the market. There's not enough income generated to buy it, espeically if foreign investment continues to dry up.

            The only question in my mind is, what happens to SJ after 2020? My bet is on a long, protracted period of declines from 3-5% YoY for several years.

            1. San Jose’s supply is up about 100% YoY and I certain expect the market to decline for several years.

              But a 1% decline in mortgage rates since 2018 will help, and so will the expiring lockup periods of 10,000+ tech IPO employees starting in Nov 2019, so I expect the market to gain a footing.

              I’m heavily investing in the heartland of America to diversify my real estate holdings and take advantage of lower valuations and higher cap rates via real estate crowdfunding. I think the migration will be a multi-decade trend.

              Do you own or rent? What is your ownership history so I know where you’re coming from.

              I’ve been long SF real estate since 2003.

          4. Can’t seem to reply any further in the thread, so this is a reply to your most recent reply to my post.

            RE: Tech IPOs, I think we’ll see a surprisingly higher number of these folks take their money and run, interest and sentiment toward the Bay Area seems to be changing. As I said above, most of these new stockholders will find their stocks worth less than they had hoped when November finally rolls around, especially if this euphoria for non-profitable companies finally subsides. The 1% decline in mortgage has been here since March, I am still seeing little evidence of it helping. IMO, it staved off the correction from starting this year in some areas at best. If it hasn’t helped in the spring market, I struggly to see why it would help in the fall and winter markets.

            I wholeheartedly agree with you that investing in the heartland is the right way to diversify RE holdings. Much better cap rates, lower costs of ownership, in the right areas, a much newer housing stock. There’s little money to be made in the hottest areas anymore, especially if the rental property is financed. I like some of the “growth” cities like Nashville and Raleigh, but I am fearful of pullbacks in these areas in a recession, since their job markets are still growing, and maybe not as fast as the speculative real estate markets.

            Not sure why my history matters with my financial argument, it seems like an attempt to drum up a straw man argument to discredit my economic analysis. But, to answer your question, I’ve owned now for over half a decade in the Boston area (I am still young), and I have seen my equity skyrocket and I have made quite a bit off of two sales (for what I started all of this with). I just believe we are pulling up the ladder from too many people, who couldn’t do what I did again, and demand will eventually drop when this pulled-forward demand finally gives way. Ultra-low rates have rewarded speculative debt buying and punished the prudent savers. I don’t think values will ever see their 2012 or even 2015 lows again, but I do think anyone buying Spring 2017 or later is going to find a lot of their equity disappear. I have seen significant slowing around me in Boston in the past year. Have gone to a few open houses just for fun, noticably different than the time of my last purchase a few years ago.

            I agree with your sentiment in this article in general, which is why I believe in owning a home. It was never intended to enrich me, it should be there for people to achieve financial stability, grow at modest rates with inflation (so that you get the advantage of relatively fixed costs compared to rent). It has become subjected to wild swings thanks to speculation and credit cycles, and the people trying to do the right thing and buy a piece of the American dream will get whacked once again, while investors pick up the scraps. When you add in maintenence on an ever aging housing stock, innocent pursuit of the American dream can result in people being far worse off buying in the wrong time than if they had rented.

            1. Cool. To each their own. Every property market is different. I plan to continue buying panoramic ocean view properties in San Francisco because I think SF is one of the cheapest international cities in the world, and ocean view properties are still at a juicy discount in SF.

              The incomes are very supportive of real estate prices in the Bay Area, unlike in Vancouver, for example.

              I really don’t know much about Boston, except for I can’t live there for half the year b/c it’s too cold or too humid! But I’m a wuss like that.

              Markets slow in the summer and winter, then pick up again in the spring.

              SF median price for 2Q2019 is back to a record high.

  10. Money Ronin

    One should definitely set expectations and not coddle one’s children. Just be aware that if you kick your kid out at 18 or 22 or 30 or charge rent, he or she may not be so helpful in your time of time need in your old age.

    However, as Sam, mentioned, everyone’s different–parents and kids. Hopefully the kids will see their parents as helping build their independence and not abandoning them–it’s a fine line.

    Also, if you have more than one kid, it is absolutely okay to treat them differently. I’ve seen too many situations where parents treated their kids equally and the outcomes were very different. While this absolves the parents of favoritism, perhaps one kid needed more emotional support or less financial coddling. Most of the situations I see resulted in one kid who became financially independent whereas another sibling ended up being a lifelong dependent. The parents had offered the same assistance and bailouts, but one kid took greater advantage. The “freeloader” effect needs to nipped in the bud.

    If you give both kids a $10 allowance, and one kids saves the $10 whereas the other kid spends or loses it, that’s a good indication that equal treatment will produce very different outcomes.

    1. Great point about not getting help in our own age if we demonstrate too much hard love! Totally forgot about that.

      To the grandparents unwilling to help out their children when their grandchildren are babies, beware! Your children might be too busy to take care of you too.

      I plan to be the most involved grandparent possible in my grandchildren’s lives health willing.

      1. Apparently, it is not how much you give your children, but rather how they see you treat your parents, that determines how they will treat you in your old age. Children follow family patterns, for divorce, looking after parents, and many other social obligations.

  11. When I was in my early 30s I dated a guy (also early 30s) who lived in the ground level apartment (no basements in NOLA) of his parents’ house. His older sister moved out in her early 20s, worked, got married, had children, etc. The parents raised the two completely differently. They coddled their son and didn’t encourage independence because they WANT him to stay at home so that they feel needed. The guy once admitted to me that he was “waiting” for his father to die so that he could move back upstairs and live with his mom.

    Actually there are lots of these boomerang kids in New Orleans, this guy I dated was not unique.
    I think as a society we somehow ended up praising girl power and don’t know how to raise boys in modern society so they end up being Peter Pan’s.

    1. Hmm, could parents really want to have their sons stay at home more than their daughters? Could be. Maybe it’s because of some old way of thinking that these families want someone else to take care of their daughters?

      “Waiting for his father to die so that he could move back upstairs” is one of the worst things I’ve ever read.

      How did you feel about dating a guy with this type of thought process?

      1. When I realized he wasn’t going to grow up and want a wife and children of his own, I knew I had to move on. Since then he has had maybe 3 girlfriends (now exes), all of whom are smart, professional, beautiful women. He still lives at home. I imagine they came to the same conclusion I did.

        The other thing I wanted to point out is that supporting boomerang children can be detrimental to the parents’ ability to retire. I know a guy in NOLA in his mid 50s with 3 adult children and their partners living with him (2 boys and a girl + 2 partners). The only contingency to this arrangement is that the childrens’ rooms do not have doors. I also have an uncle in his 70s who has his own business but he will never be able to retire because he has to support his 2 adult children (one does not live at home but both still get support).

        If you want to retire, you must raise independent, resilient children.

        This post has made me think about buying real estate in NYC where my family is. I plan to retire in about 5-6 years and move back. In the meantime, working full time does not allow me to be an active landlord, so I am happy with my $105K in Peerstreet generating good income. And after your recent post about RealtyMogul has got me interested because I want to diversify. Peerstreet is predominately single-family homes, whereas RealtyMogul does NOT invest in single-family homes, so I think they would complement each other in my RE holdings. I have an account but have not funded it yet.

        Lots of random threads in my comments here. This has been a very thought-provoking post! Thanks for the continued good work here!

        1. Fascinating stuff. Was it not a turnoff in the very beginning when you discovered he was living at home with his parents as an adult?

          I’m trying to look at the positives of adult men living at home. And if they can still have a flourishing dating life, then maybe it’s not so bad?

          On real estate, I’m not a fan of using crowdfunding to buy single family homes. The purpose of crowdfunding is to capture the mid-market, commercial real estate segment that may have more opportunity and higher returns. Although this is what Roofstock does.

          Single family homes is not as scaleable for the platforms. And single family homes are what we should be able to buy.

  12. This isn’t complicated. Assumptions made in the past for adulthood, 1) worklife/career; 2) home; 3) spouse/significant other; 4) children, may be rational. But today, for most young adults, they aren’t realistic.

    Young men living with their parents, don’t-and-won’t have work that has the potential to buy a home (especially in a city where the average home price in 2018 is $1.6 million). The few that do have the potential are already out of the house. Without that potential to provide, those young men are poor candidates in the mating pool. Without an s.o. and means to sustain a home, having children is not a rational choice (not implying that is the reason some women choose to have children outside of a stable marriage).

    Young women are now the majority of university students, medical students, and law students. With equal-or-greater potential for earning, a young woman’s decision to choose a mate with inferior educational/earning status is suboptimal. Good-looking women will always have attention, and mate choices. Though the cause-and-effect may be arguable, homely are largely lesbians and public school teachers. Mystery solved!

    1. But the $1.6 million median home price doesn’t discriminate between males and females.

      In your situation it seems to me that it’s therefore tougher to be a man than a woman in today’s society.

      What do you think?

      5 years of only seeing adult male children living at home and only 1 female adult living at home (who moved out within 6 months) can’t be a statistically anomaly.

      1. Agree 100% with all your points. You are right, it is not a statistical anomaly that you are observing and more adult men (than women) are living with parents.

        Let me try again. Cute girls will never miss a meal, and always be welcome in a warm bed with a roof overhead. Cute dudes don’t have that advantage (except in the Tenderloin and similar). A low percentage of women actually DESIRE to grind it out for decades in a high-paying worklife. Men don’t either, but they do it anyway for status and mating strategy. Or don’t, and play video games and watch Judge Judy, while waiting for their parent(s) to die.

        Not harder to be male/female/variant, but harder to meet past societal expectations that no longer pencil out for most. I do love all the stories in the comments about the ‘hero’s journey’, though.

        Women don’t need a man as ‘provider’ in the same rate as times past, because they can provide for themselves (i.e. Japan). Men living in a $1.6mm home will most likely never duplicate that standard of living, and don’t have the same motivation to gain education/skills for a high-paying job that will support the four assumptions (work, home, s.o., children). Realistic, but no longer rational.

        Why worry about ‘real estate as a hedge’ when those bad things all involve high-paying work, a home, a s.o., and children? Slacking is the logical choice for the young me you observe.

        1. And what happens to “uncute women?” By your definition, wouldn’t they be adult children living at home to? But I don’t see them either.

          So perhaps these women are highly educated and make more money and are therefore more independent.

          1. ‘Uncute women”? Who cares?!?!!

            My first reply explained their fate as becoming lesbians, or public school teachers. Seriously, in spendy neighborhoods such as yours, the vast majority of females are 7+ Men who can afford homes there have strong mating options, and marry good-looking ladies. Look across your llving room! Do you think Mrs. Samurai married you for your USPTA 5.0 rating? Top earning men mate with prime females, and produce great-looking children. That is why you don’t see any butterfaces living with their parents.

            This is not a firm rule, and there are exceptions. In my case, I got my foxy wife by throwing a net on her, from horseback, like in ‘Planet of the Apes’.

      2. Sam, my theory about this is that the boys get respect at home, and the mothers like the attention from their sons. So many friends I have treat their sons with great respect, and always want their help with something they could do themselves (e.g. tech problem, financial advice), so they entice them with dinners and laundry service. The son is assumed to know it all and be in charge. Daughters are expected to be mature adults, and don’t get much benefit/respect from parents even if they are sucessful. This is pretty biased, but I think has some truth in it.

        To the guy who thinks girls can use their looks and sex and succeed or marry success, I wish it was that easy. Us women would have it made then.

  13. With Los Angeles being so expensive. I attribute a lot of my success because i lived and stayed rent free in my parents home until i was married at 30 years old. Throughout all my 20’s i was always working hard making 80-120k per year and most importantly saving and investing many thousands every single month into the stock market via roth ira’s and brokerage account and rental real estate. Hit the 1 million net worth mark at age 32. None of this would have been possible if i had to live on my own and rent my own place at 18 or 21 years old. I know so many of my peers all in the mid 30’s like myself that had to move out and support themselves at 18 and its just an endless cycle of trying to survive and pay the rent and pay living expenses. Many now well into there 30’s and they still cant get out of the pay check to pay check survival mode.

    1. How was your dating life in your 20s? How did you overcome any embarrassment, if any that you lived at home for so long after college?

      Maybe I’m overlooking this men living at home with their parents thing based on my upbringing. I wanted to have a rich dating life, and would feel too embarrassed if I lived at home.

      Perhaps living at home is just totally normal now well into adulthood?

      1. Questionable Existence

        I dated pretty shamelessly while living at home. And my parents, more so my dad, could assimilate pretty well into my social circles (friends, girlfriends).

  14. Bay Area reader

    A counterargument is that owning real estate allows adult children to be lazy!

    But more seriously, it is odd how you frequently argue that real-estate prices are inflated on the coasts, but you keep advocating purchasing it.

    1. Thanks for the feedback. What part of this article talks about specifically encouraging folks to buy in the Bay Area? I tried to make this article relevant nationwide and worldwide.

  15. I lived with my parents until I was 32. I bought a duplex at 30 and rented for two years before moving into it myself. Those years living at home without being charged rent, I saved enough to afford the home on my own. So that helped me out a lot as far as affordability. Maybe I would have been better off moving out at an earlier age as to not get so comfortable at home, but I would have had to rent and buying that first home may have been more difficult.

    1. Thanks for sharing. How was your social life and state of mind over all have in your 20s? Did you ever feel bad that you were still living at home for most others were not?

      How did your parents feel about you staying at home until 30? Specifically your father.

      I’m definitely looking to see the positives be on the monetary aspects as well as the negatives.

  16. Simple Money Man

    Real estate near friends, family and a strong community is a priceless benefit. There are so many good things that can come out of that and it’s what I call location location location!

  17. EightDigitFI

    Even though markets (both RE and stock) are up, I am still ‘long’ on RE as the best investment option to deliver financial independence…

    If one compares actively managed RE to the primary alternative of stock investments, there are a lot of positives and only one real negative…
    1) Tends to appreciate at GDP+ in most areas of the US (area like Phoenix, etc. have averaged ~6-8% over long term)
    2) Generates income at roughly 2-4X a typical dividend stock (cash-on-cash return)
    2) Able to safely leverage your money, so the above income on a relatively low (>70%) LTV can generate ~30-50% annual return
    3) Its a hard asset which won’t go to zero/bankrupt like a stock could
    4) There are unique advantageous tax benefits in terms of servicing cost write-offs and depreciation.

    When you look at total return of RE vs. stock market (leveraged appreciation, yearly cash income, tax advantages, and free debt payments from the renter), then RE beats the stock market hands down.

    For example, If one buys $1mil in rental assets for $250K, and makes net 7% CAP and 5% long term appreciation, then in ~30 years, your $250K investment has turned into more than $5mil+ in profit (total cash payments + debt free asset value). That doesn’t include the tax benefits and other ‘ticks’ you can apply to rental activities.

    The only real negative is the ‘active management’ part – and that is a real negative which slowly wears on you over the years. None the less we have done extremely well with long term rentals.

    Coming back to 20-30yo children living with their families… one thing we have done is simply bought our son a condo near where he is going to college. It was less expensive than simply paying for dorm room fees and we get the appreciation over the 4-5 years he is in college. Upon graduation, we will then let him purchase the condo at the value we originally bought it for, or he can move out and we can continue to keep it as a rental. It is not a complete hand-out and for ‘college graduate’ son, it potentially gives him an immediate equity boost to start off is career and we can also give him an advantageous mortgage rate if we happen to own it free and clear (which we do). If he takes a job out of state, he can also sell it for a profit and use the proceeds for a down payment on a new house, or, we can simply take it back and keep renting it. Again, not purely a hand-out to him but a nice first step forward for him (we could theoretical just give it to him if you want to do the purely hand-out thing…)

    Lastly, comparing actively managed real estate to alternative RE partnership investments Sam has talked about, I still see direct ownership as the best option (assuming the negative of “active” management). Investing in alternative RE options, almost always require one giving up any/all control on investment decisions, how to apply cash flows, how much leverage to carry, etc. and there is always extra overhead costs for someone else doing all the work. In general, a lot of risks which you don’t control and a diminished return from what you could do yourself. I get the trade-off of taking slightly less return for a hands off approach of participating in RE but the uncertainty of controlling the additional risks, has kept me from taking that step. Maybe some day (BTW, I am looking at options for this)

    1. Agree with you on alternative RE partnership investments. Properties I’ve purchased and managed have performed fantastically. Crowdfunded real estate investments have performed poorly, and many deals have completely failed with total loss of principal. Crowdfund companies are incentivized by increasing deal flow to increase their own equity value, as far as I can tell they often sacrifice investment quality.

      1. Honestly, it’s probably because you are a bad real estate investor. Are used to blame my poor returns on everybody else as well until I got smart about stock investing in real estate investing.

        1. I’ve made 3 million in direct real estate investing from only 5 properties and a handful of real estate partnerships, so I think I did alright… How well have you done?

          1. Over $8 million. Just got to keep learning if you want to do better. I don’t blame the stock market for my losses, neither should you.

            1. Most of my assets are in the stock market. Real estate was a hobby, hence only 5 properties. Not sure why you think I’m blaming anyone or anything. I only said that crowdfunded real estate is not as good an option as finding real estate deals on your own. Of course you need to learn about real estate if you want to find the deals on your own. Don’t tell me you made your 8 million from crowdfunded real estate…?

  18. I’ve noticed this is endemic. A portrait of an American family in bay area often includes degenerate, vapid adult children living at home. Radiologist neighbor’s 30-year-old daughter still in college lives with parents in between abusive boyfriend. 26-year-old son doesn’t work stays in his room with depression. 19-year-old son was at least trying to do anything but rejected from special forces due to colorblindness. I suspect the number of males living with parents are higher because females are more likely to move in with their boyfriends. Elizabeth Holmes moved in with her boyfriend. My parents gave me only what I needed such as an education which makes me privileged. Anything else I had to earn myself. Another observation, 1st generation children seem to do well with Immigrant parents fighting to maintain some moral aspects of their culture only to be lost in the 2nd or 3rd generation. In time great grandchildren become the typical American. Where’s my baseball hat. If you have children doing well, maybe it’s has more to do with being 1st generation rather than because you are just so uniquely superior. Kid graduating from medical school in 3rd or 4th generation is impressive. 1st generation not so much. By the way rich people don’t send their kids to medical school. 1st generation buys it, 2nd builds it, 3rd sells it, 4th is on heroine. American families after 3 generations without some level of success probably never will. One exception preventing this is by keeping a religion. Orthodox religions seem to maintain morality longer

    1. Max,

      Love the comment about the “4th [generation] is on heroine [sic].” Sometimes families that had it all have to start over again, like Peter Pulitzer who had to rebuild his family’s fortune after it was gone. So I don’t think this is especially about immigrants.

    2. Having dealt with orthodox members of multiple religions when I used to work in the bank branches, I’ll say that “morality” might be a strong word for them.

      ARB–Angry Retail Banker

  19. That’s an interesting observation about more adult men living with their parents than women.I’m trying to think if I know of any women living at home and can’t really think of any. My female cousin lived with her parents for a little bit but has since moved out after getting a good job. For me, I’ve always gone stir crazy if I’m in my parents house for more than 5 days ever since I graduated college. I don’t know if that’s just my personality or something to do with me being female, but I’ve always craved independence. Very thorough list btw and lots of great positives of owning property!

  20. Hello! Great article! First time commenting but long time reader. I wanted to say that I have also noticed many young men living at home as well, and they have not gone to college and are just working, but making poor financial choices. For example, one neighbor has a son who works at Sonic and is living at home, but just bought a 2019 red Mustang. His car payment is over $600 a month and he is making minimum wage. Another neighbor has 2 boys that are working but still living at home. They say it’s because rent is too much. However, they both have high car payments and their parents have paid their car payments as well as insurance when they are between jobs. So it’s very interesting to me. This isn’t the route I want my son to go and I feel these boys in particular have gotten themselves in a rough spot due to easy financing for very expensive cars, and just no financial sense. There are more examples of this, I can think of at least 6 young men of neighbors I know that are still living at home with no plans to leave. Very odd to me.

    1. Yes, often times new cars are sitting in their driveway. My immediate neighbor is a 29 year old son with a new motorbike and older sports car, an S2000.

      Three houses down, I think the son is probably around 28. Just bought a MASSIVE Ford F-150 double cap truck. Doesn’t work construction. Uses it to go snowboarding and surfing.

      Maybe the parents just want their sons to live with them and are willing to give them everything just so they don’t leave them ever again? This definitely could be a reason, but I won’t know until I get there.

      Any other parents miss their sons and lure them back home with lots of goodies so they can stay for a long time?

  21. My daughter just finished her freshman year at college. During this year a number of her friends changed schools or dropped out so they could be closer to home. She asked me if it was weird that she doesn’t want to come home. I smiled and told her if she did that means her mom and I didn’t do our job right.

  22. I have two physical properties I own outright, my main house and a guest house next door that I am renting out. I actually want to sell that guest house as the hassle of being a landlord is not my cup of tea.

    I do love real esgshd but have gone the way of owning via syndication/fractional shares. Not the same advantages as you listed but for me all I want is the passive income aspect

  23. I grew up in San Francisco’s Richmond district (long term reader but first post). Many of my friends still live at home because they are normal people, and if it wasn’t for their parents, they wouldn’t be able to stay in San Francisco. As a fellow asian-american, my family and my friend’s families bought primarily “flats” in the Richmond district. A flat was a two unit house. The purpose of that was to have multi-generations live under one roof, have rental income until the kids grew up and then have the kids raise a family in the flat below. 40 years ago, you could be a police officer and live in San Francisco (literally my grandma’s next door neighbor on lake street). If that police officer had a son, the son could also be a police officer. Rent for the bottom unit was used to pay the mortgage until the son grew up, and then the son could move in, live a normal life and take care of his parents in their old age. Eventually, the parents would die, and the son could repeat this for the next generation.

    One of my closest friends from SI College Prep drives a UPS truck now. He lives in a flat above his mom! I work on Wall Street now, and I’m a little younger than Sam and started my career later. Wall Street has sucked since I got into it. I wouldn’t be able to move back to San Francisco, but for my family. One day I will hopefully be able to move back, assuming my family can get a renter out. What will I do? I have no idea, but Wall Street’s sword of damocles is hanging over me now that I’m in my 40s! Maybe I’ll see Sam on one of those long walks.

    1. Buying “flats” makes sense. I like the idea of having a family altogether as a unit when kids are involved. It’s my one wish, but alas, my parents have different plans. So we’ve either got to move to Honolulu or I’ve got to figure out more enticing ways for them to come visit us.

      If you’re now in your 40s, surely after 17+ years of working on Wall Street you can buy a piece of real estate in SF if you come back no? Heck, I would think you could buy a place of your own and a place for your parents too! What am I missing? Base salaries are still quite hefty.

      Amassing a nice nest egg is more about longevity of aggressive savings than returns, at least for the first decade don’t you think?

      BTW… all good about being a UPS truck driver. But I’m wondering, is it work going to private high school for this education? Public school should do. Did your friend go to college after SI?

  24. Chin up Sam, while you definitely have examples of young men not living up to their potential but here is one that may give you hope: My husband lived at home until his mid 20’s not because he was a slacker but because at 22 he was bootstrapping a business and his parents were happy to support him in the only way they could by providing him low cost lodging. He moved out when the business cash flowed enough to pay him a living wage. A few exists later and we are certainly glad they were able to help him dump that much more money back into the company in the early days.

    Your points bring up many great reasons to be interested in real estate, however I agree with you on being more excited about real estate alternatives than physically adding more land to my portfolio.

    1. Thanks Hillary. Maybe I am just living in this weird neighborhood with so many stayed home adult male children. But what I see definitely weighs on my outlook. It gives me uncertainty and makes me wonder what happened in each situation.

      I’ve talk to one father who has a 29-year-old son living at home. And he just said the son was simply not ready for life. But he also said his middle son, who is graduating from college will probably come back home to live with them as well.

      I don’t know how they parented, but I do know that my neighbors parents seem to be well off, and that may have affected my neighbors motivation and their children.

      I’m afraid that having well off parents who don’t teach kids about the value of hard work really crushes a kids’ motivation.

  25. “Where have all the adult women children gone?” A lot of them are the people buying real estate.

    1. I’ve seen that growing trend too. Fantastic!

      I bought my first place a day after my 26th birthday as a non-married guy. I didn’t care about getting married first. I wanted a place to call my own first. Get the job, the house, and then settle down.

  26. Hi Sam,

    Great article as always. I am a renter — I prefer to be so for a number of reasons, right now — but I do hedge with virtual real estate ownership as you’ve suggested. But, as the saying goes, God ain’t making any more of earth, so it’s a good asset to own.

    I wanted to suggest you do an article on the recent Taylor Swift / Scooter Braun / Big Machine fiasco. I know you don’t have music industry experience, but I thought it’d be a fascinating look on the cost of giving up the rights to your own production (i.e., your passive income stream, as you’ve talked about) versus “getting a shot” in the industry that’s bankrolled by the label, which owns the rights to your music. It’d make a fascinating case study.

  27. I notice how many of these bullet points are related to divorce and marriage. These issues have become more and more prevalent as of late. You ever heard of the misandry bubble?

    1. Never heard of it! But now I have.

      What is driving increased hate for men, if that is indeed the case?

      What happens if this bubble bursts, if there is indeed a bubble?

      Here is a long article that discusses the Misandry Bubble.

  28. Very interesting post. I am
    using real estate in a similar fashion. My parents got a divorce and my mom moved back east and my dad had nowhere to go. Unfortunately my parents did not make sound financial choices and didn’t have any savings to fall back on. I am in a position which I can help out my dad by purchasing a condo that will fit his needs.

    1. “Nowhere to go,” is something that keeps happening after a divorce if a couple only has one house. That’s great you’re helping out your dad.

      Losing the house or feeling like you got kicked out feels bad. But at least it’s a way to start anew. Further, surely liquid assets have been dispersed out to the spouse who doesn’t get the house.

      1. Questionable Existence

        My dad’s best friend just divorced his second wife and she took almost all his assets, so he had to go back to work and out of retirement. He lost the house(s) he had, too. My dad said he has a very easy-going mentality, like if you want it so bad have it. He’s not the type to fight over assets.

  29. RE is also an easy target for municipalities with unfunded pensions. Look no further than Chicago.

    The best kind of real estate is movable real estate. The kind that is invisible to the system.

      1. What’s the number one line item at the top of any central bank asset list?

        And guess what the end game is? Trump just tweeted what it is and yesterday’s nomination to the Fed was another big tell.

          1. Don’t mind me. I’m just bitter I missed out on the property bull run.

            But Chicago is a crooked joke. They tax and tax way too much, and have nothing to show for except the highest murder count in the country.

  30. If you tell your son he’s not allowed to stay home after college or high school then he’ll know the expectation up front which will help him plan. What I’ve noticed (I’m 22 years old, just finished college) is that the people I know that are still at home is usually because they had no plan and the parents didn’t tell them to leave. Me for example, I’m moving out this week. I wouldn’t mind staying here (no rent, access to food/car, way bigger house, good lifestyle overall), but my parents told me repeatedly that I will not be allowed to stay home after college so I made plans to leave. I have noticed some friends that have a job in their home city so they stay home with parents to save money which makes a lot of sense, but my parents wouldn’t allow that.

    1. Good to know that I should simply just make it clear and set expectations. Sounds logical.

      Don’t mind my son staying at home for the first year after college if he goes. Maybe even the first two years. But after the age of 25, he got to go!

      Even if rent cost him 50% of hus salary, it’ll teach him how to be a man and be on his own. It’ll teach him to try to save aggressively and work hard at work and hopefully build some side income to not feel so financially stretched.

      I hope by the time he is 18, I can teach him the value of earning what he deserves and learning how to be more financially independent.

      1. I agree with John that it is about the expectation that is set. Growing up in southern California as the youngest of 6 kids, it was clear moving back home after college wasn’t an option. My parents sold their home and moved out of state to an age restricted community in AZ. I got the hint and made it work with a first job in a HCOL area – truth be told the idea of moving home didn’t appeal to me anyway so I would have done whatever it took to be independent.

        Kids are strong and adaptable and will live up to the expectations given them. As parents we can’t be afraid to challenge them to live up to their potential.

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