19 points comparison: Real Estate Investing vs. Bitcoin Investing
Hey gang, this is Mike with my RealEstateDOJO and today I want to do something different that’s not been done and basically I want to do a 19 point comparison between real estate investing versus Bitcoin investing. And since I’ve been investing in real estate 12 years now, I’ve been an entrepreneur for 20 years. I understand this a lot so I did a lot of research to understand this so I want to bring it to you so you guys can understand what’s going on. So let’s pull the curtains back and get started.
One of the first thing that real estate is different from Bitcoin is, this is very important, you have to understand this; you can buy it below price, where in Bitcoin you cannot buy it, there’s no way.
What do I mean? As an investor what I do is I market to motivated sellers and the house is valued at $100,000 and everyone else is hiring a realtor, driving out there, getting along trying to buy this. I can buy the same house at the price if I find a motivated seller for 50 or 60K. And so what that means is, in real estate in they are willing to educate themselves just like entrepreneurship, instead of getting a job they’re actually out there and finding these motivated sellers and getting the deal at discounts. So number one is very important, in real estate you are able to buy real estate at a deep discount, everyone is paying a hundred, you can find a motivated seller to give it to you at 50 or 60. Now some of you say “hey Mike there’s not many people out there” I don’t think this is true, look into my YouTube channel I have significant property that I bought I also have students that done deals and look at how there are motivated sellers in the real estate business. With Bitcoin, you can’t, whatever the price of the exchange, you have to pay for it and there’s nothing you can do about it.
The next one I want to talk to you guys about is in real estate, many people get into the business by speculation which means like gambling and they do it wrong; but for me and many other investors, real estate is not speculation; speculation is gambling, it’s not speculation at all.
What do I mean? When I buy a house worth a hundred and I get it at 60 I’m not gambling anything, I already have $40,000 of equity. Now let’s say the property drops to 80, that’s okay too that’s 20% down and that’s a lot for a property, also I have 20 grand. Let’s say it drops down to 30 or even 40, it’s okay because I bought it exactly in a recession price; where Bitcoin it’s not like that.
The other thing I want to talk about is the speculation price is that in real estate, if you buy a house worth a hundred, you buy for a hundred (which sometimes I do) if you get cash flow from it, it doesn’t matter if I buy a house worth a hundred and I bought it for a hundred and this thing gives me $400 a month after PIT which I principal interest and tax, I paid everything and it gives me $400 a month cash flow, well I’m not speculating that the market is going to go up; it doesn’t matter if the market come down, after I make my debt services, I’m already profiting a cash flow 400bucks. So when I buy property there are only few things I’m looking for, I’m looking to buy at a deep discount or I’m looking to do some kind of terms where the owner carries a note for me so I don’t have to go to a stinky banker. That’s said, if I buy a property at exact price of the market as long as it’s making a cash flow, it doesn’t matter if the property goes to 80,000 because the market crashes, I’m still cash flowing because I can get ventures of it actually the rent will go up because in the foreclosure everybody is losing their home and there’s going to be more people that’s going to need to rent and that’s going to push the market up. So real estate, if you do it correctly, you’re not speculating, you’re not gambling. With Bitcoin and all crypto currencies out there, you are speculating, you’re expecting that it’s going to go up in price in demand or in buyers. If on the exchange for one Bitcoin is 10,000 you can’t find somebody saying “hey dude are you willing to let it go for $6,000?” there’s a possibility, if it was inherited and don’t how to use it, then sure. But majority of people that have Bitcoin knows how to sell and exchange for it quickly. So Bitcoin is speculation, you can say that “oh no dude, I know it’s going to be the next future, I know it’s going to be the next internet” I agree with you, I believe that Bitcoin is going to be the internet in the next future but we’re speculating, right now if I bought a 10 it will probably be a 10; where here the price is 10, I can buy it at 6 if I’m a great marketer, if I’m a great negotiator, if I’m great in sales, if I know different ways on how to structure deals and on the gambling part, it’s not gambling because I’m buying it $400 a month positive for cash flow, it doesn’t matter if it goes up or down, I’m still winning, if I buy on a deep discount it doesn’t matter if it goes up or down, I already won when I bought it; where in Bitcoin I have to gamble that it’s going to go up, when I buy it at $1, $2,500, $20,000 I got to expect it to go up, so it’s a speculation game and I never speculated about stocks and which brings me to the next point but I have Bitcoin because I believe Bitcoin is the future.
Number 3 which why I haven’t bought stocks three: control.
With real estate if you’re an average home owner and you become an accidental landlord you don’t have any control because you haven’t done your due diligence you haven’t been let’s say read the books on how to be a landlord, you haven’t talked to eviction attorney, you haven’t been to the eviction court, you are now willing to screen your tenant, run a background check etc. So if you do that then you have no control; but for the professional like myself or other people like myself, in real estate you have total control. In 2006 fourth quarter when everything melt down, I didn’t get into stocks even though I knew it was a great time to get into it because I don’t have control to these companies; I don’t know what the CEO’s going to do, are they going to take more risk, are they going to take more debt and I don’t want to put my money to something that have no way to control the vehicle, if I can pull it up or hit the brakes I can’t. But with real estate I can, I’m a whole buyer guy so I can buy a real estate and I can control it. Who can I control? I can control what rent I put in there, I can control how much security deposit I put in, I can control the rents, I can control what AC guides I have to use, if I want the top company, the low company, so I’m in control. With Bitcoin, but again I’m not dissing Bitcoin, good stuffs are going to come to Bitcoin but in the second; when I buy some like and X, I don’t know when it’s going to go up, I can’t control for it to go up no matter what I can do, I pray, I can do videos about it but I can’t control it or just any stocks. So the point is you have control here if you’re and expert; and you have no control in Bitcoin, you can learn how to read graphs but you really do not know and you cannot truly control. When I buy a house at 60 cents on a dollar I’m already in control, it doesn’t matter. When I buy a house and make a $400 cash flow, I’m already in control, when I’m screening the tenants I’m already in control. I hope I’m drilling this information to guys.
Now let’s talk about something good about Bitcoin. Labor, when you buy a Bitcoin like I bought a Bitcoin when it recently crashed and the prices are going up and it’s so easy, I just put my put up every morning and I make some money dude and I’m so happy, I’m so excited and I tell my girl. So it’s easy, you put your money up and the labor is zero. You don’t have to do any labor, I mean the only labor you got to do is look at the exchange and see how you are doing, if you’re losing or winning.
With real estate, labor is 100% intense. For example, when I’m a buying whole guy, I have to look the property up, guess what? I’m in eviction and screening I still got to evict people, guess what? When hell comes through, I still have to replace my roof, when the AC goes wrong because I live in Texas and it is like 100 degrees, guess what? I got to pay for that. So it’s highly intense in labor and management; with Bitcoin it’s easy as hell I just put my money up and I just look once in a while. So when you do the comparison, Bitcoin wins the labor in this guys.
The next idea is insurance, I can’t buy insurance on Bitcoin not that I know of, maybe somebody out there, I can’t do that; but in my real estate I can, so if I have a house in my rental blow out in a fire, I’m covered, if hell comes through, I’m covered, I just have to pay my deductible. In Bitcoins, if I buy $10,000 and it goes down, who can I go insure me? Who can I go get my money? So it’s not insurable guys. So you guys got that already.
Let’s go to the next one, and here’s a real good one and this is all for Bitcoins. With Bitcoin, the amount of money you need is very little; for example, if I want to buy Bitcoin, I can buy Bitcoin for a dollar, I can buy Bitcoin for $10, for a thousand, or whatever my budget is. With real estate, majority of people, they can’t buy real estate with their dollar or ten bucks or a hundred. Now if you’re thinking in dojo class I will teach how to buy real estate, you can put it on a contract for a dollar or other creative real estate financing but I’m not going to get into that. But majority of people cannot buy properties for whatever they got; if you got 10cents in your pocket, you might be able to buy Bitcoins, or a dollar but in real estate you cannot, even if you create a financing, you got to spend more than a dollar for advertisement or drive to the seller’s home etc. So Bitcoin, you can get into it with little amount of money; with real estate, you need more money than the average Bitcoin investor. Now that doesn’t mean you cannot use $1 to make money on real estate, you can but you have to be a sophisticated investor, that’s what I teach at my real estate dojo, where you can use $1 to ascertain a property and turn around to sell it and make 3, 10, 20 it depends on the deal, but the average people cannot do that.
Now let’s talk about the next one and this is a really good idea. Lending, I can go to my bank, which I don’t go to a bank, I just deal with the sellers which I’ll talk about later. I can go to a bank and borrow money to buy a house; but I can’t go to no bank and say “I want to buy $10,000 of Bitcoin or I want to buy a $100,000 Bitcoin” actually banks where on the news like 2 or 3 weeks ago saying that they’re not going to allow people to allow them buy Bitcoins on their credit cards anymore. So this is my point exactly, lending, variable, Bitcoin? No guys.
The next idea which I love and that’s what I teach at the real estate dojo is owner financing. Owner financing is a strategy that we use on the dojo to buy real estate and have the seller, the home owner finance the deal for us. I can buy real estate, I bought many real estate deals with just no money down. I bought real estate just putting a dollar down to tie it up, I bought many real estate that I made a $100,000 from the equity cash when I sold it to the monthly cash flow when you add it up together and I only used down $3,000 investment, 6, 7 years I cashed it a hundred and I sold it fast, I didn’t even get all the equity that I want because I was motivated myself but that’s a different story. So the point is I can buy real estate by owner financing and have the seller finance it. Now, not the average Joe that hires a realtor or the average investor that hires a realtor, they’re not going to get to this what I’m talking about. What I’m talking about is being a sophisticated investor, being inside investor, and I you have those skills; you know how to market, you know how to negotiate, how to find, how to structure deals, then you can find deals and have the seller carry the note or have the seller, you just take over their payments without them getting a new note or without you getting a new note.
Bitcoin, I am still looking for new ideas where I can find some sellers of Bitcoins and say “hey buddy, you have $10,000 of Bitcoins, can you just give it to me and not put any interest or just give it to me and I’ll pay you later” I haven’t found anything like that, but if I do, I’ll let you know guys. If you guys have an idea like that, please let me know, let’s create a community here.
Let’s go to the next point. The next point is pretty good, it’s about appreciation or the price going up. Real estate, the price goes up and sometimes comes down but it takes a while; for example I bought a house, I put $3,000 down and after 6, 7 years sold it and made a little bit more that hundred thousand dollars from the equity cash out to the monthly cash flow, but it took 7 years to put me 7 years babysitting that house, putting hands up there, interviewing renters, going to eviction courts, changing AC’s, changing plumbing, cutting the grass. It took a lot of work, it took 7 years but I made a 100k out of 3 grand, there’s no place you can do that besides America guys. But it takes 7 years, it’s a long time before the price will go up. Some of you guys may live in a bubble, cities and it’s an appreciating areas and it may go up faster like 2006 fourth quarter that’s why the crash happen, people buy home and instantly going up by the time the time they finished up construction. But realistically, real estate may take a while but the capital and the gains will make you wealthy. Bitcoin in the other hand is very fast. I mean you make money real fast and at the same time you will lose money real fast. So it’s very high velocity where real estate is a real velocity like it will take long time for it to go up, and it will take long time for it to come down. Does that makes sense? And it usually doesn’t go at the velocity; like in Texas last crash we saw, we might lost 10, 20%, other states probably a lot more; but Bitcoin, you can lose 50% just like that, like the last crash we had last 3 or 4 weeks ago, they dropped 50, 60, and 70% real fast. It went up fast, it comes down fast. So appreciation in real estate is slow but in Bitcoin it is super-duper fast guys.
Bitcoin and real estate, if you give it to your kids, with real estate you already know people buy houses and their kids inherit it; Bitcoin? We don’t know yet because we don’t know if in 10 years, Bitcoin is going to be here. Now I personally think that it will, I think it’s the future but I don’t have a crystal ball so I won’t tell you all that it’s going to be here. We don’t know, I might ascertain a hundred Bitcoin and then it goes to zero so I’m not sure if I can pass it along to my kids.
The other thing we talked about was cash flow, if I buy a Bitcoin, I can’t have a cash flow from it, and you get appreciation from it because the price is going up so my money is going up but I’m not getting every month, the price is going up and I’m getting a cash flow. With real estate, my house can be appreciating plus I’m getting monthly cash flow; so my price in my house, I bought it for 60, it’s worth a hundred, it actually went to 110, but meanwhile I’m getting 400 every month, the next year 120 meanwhile I’m getting 400 every month. Bitcoin is not like that, all you’re getting is appreciation, there’s zero cash flow coming into your nest guys.
The other point is you cannot refinance your Bitcoin. Refinancing is like “hey I still have my Bitcoins but I’m going to get some of it out and I’m going to make monthly payments and still keep my positioning so I could still get the appreciation; maybe in the future they will. But in real estate, if you have house and you have equity in there, you can still keep your positioning, you can still keep your asset and refinance it for less stress than if you sold your house and get appraisal etc. Most company right now will refinance your home without even appraisal guys, it’s pretty crazy that’s why I say the crash is coming.
Another point is that Bitcoin is something you cannot touch, so if you have $100,000 of Bitcoins, you cannot touch it and its intangible, and house is tangible, I can live on it, I can kick out my renters when their lease expires so I’m going to rent it to myself.
Now here’s a very important part and this is the lesson that I learned that I kind of kept it for the end, is that real estate sales like the sales part. Real estate is slow, what do I mean? Because you only are getting to sell to one buyer, and it’s slow because, let’s say you put it on the market, you have multiple shows, you have multiple offers, you get one buyer, and you got to wait for that buyer to qualify and get a loan something that inspires a cash buyer; where in Bitcoin I can actually go to an exchange with a click of a button, sell, and that’s it, I got tons of buyer waiting and ready to go. On real estate, they might be tons of buyer but the buyers have to hire a realtor so the selling process is very slow and one that I learned is that by a year and a half ago I sold a house at a $120,000 equity because I want to move fast. So the other problem with real estate versus Bitcoin is that if you want to sell fast, you got to take a hit because if a normal, what’s called Days on the market (DOM) to sell a property is let’s say 120 days and you want to cash out tomorrow, the only way to sell it fast is you have to give a deep discount, you got to get a haircut; now with Bitcoin it’s just like that and there’s buyer, the other good thing with Bitcoin because you have buyers and they don’t have to hire a realtor or talk to an attorney, it’s just a click of a button. And here, everyone and their momma have to be involved, you need to have an appraisal, you need to have an inspector, attorney, the realtor, your momma, your cousin, and everyone is involved so it’s a very long process. So if you want to sell fast, the only way to do that is to lower the price that can attract the people with cash versus the people that have to borrow some money. That’s a very important part. You want to leave the country? You want to move to a different state? You need it o emergency? You want to liquidate, why should I take a deep discount? Because I have an access to real estate, I have to take a deep discount which kind a punch me in the face but that’s how I learn, now I know there’s a difference between liquidity and if I buy asset, how fast can I cash it out without taking a haircut, taking a loss; and that’s in my investment, I’m going to have investment in I have to wait a while like in real estate, I also have like investment where it can be liquidated in Nano second and I get my money. I don’t have to wait around and wait for people to give me my money which is kind of important because if the crash comes, with a click of a button, with real estate, I got to wait for the title company, I got to wait up for the attorney, I got to wait up for the appraisal guy and I got to wait up for all the lender, I got to wait up for the mortgage broker, I got to wait for the realtor. But I’m not dissing real estate, real estate capital is great and cash flow is awesome also.
The other thing I want to talk about real estate is old like everyone already knows, if you don’t know, just go into IRS, most millionaires are in real estate. So people already know that real estate if you do it right it will make you multi-millionaire; now Bitcoin has made a lot of millionaires but it’s not proved for long period of time, it may only be like 6 years, 8 years, 10 years, but real estate can go from back in time like the England king himself.
Go ahead and share this to your friends and family, don’t take no for an answer, hustle and bustle. See you.
P.S. If you decided to buy Bitcoins, go here you will get $10 free bitcoins when you invest $100. (And I will also receive $10 buck…win-win)