No. of Recommendations: 3
...with respect to "survivability" I am more interested in a 3rd leg, "real" real estate: To (if I can finally decide where to live most of the year) put a good part of my assets in buying land and a decent home there.
I have been a huge fan of real estate and have done very well with it, so when I encourage you to consider the changing environmental conditions and it's impact on things like insurance and other related housing costs, don't dismiss it lightly.
Obviously only you know what directly relates to you, and IIRC you are not USA based so YMMV, but housing costs here in the US have seen a huge percentage increase, which is likely to continue as inflation increases the costs of things and increased intensity of weather events wreaks havoc on your property. Our insurance has spiked even without incidents either in our area or at our property, beyond the increase in value. Taxes of course also escalating with increased value, but add on to that movements that impact rent profitability, which is something we always analyze as a fall back position when we buy a property. We had landlord friends who came close to losing their shirt during Covid, when regulations eliminated the ability to evict for failure to pay rent, all while mortgages, taxes and other expenses had to be maintained without income. We felt the risks of rentals increased too much during that time, and while our rental was fine, (previous residence that we kept as a rental for a few years,) we felt the risks were too large on a long term rental, and we sold before losing capital gains exclusion on sale of residence. Our area is starting to talk about regulating rents now. And unlike stock, which can be sold per share, (though this is the BRK board and if you have class A shares then per share is pretty darned pricy too,) if you need income you can't just sell part of the property to meet your income needs. You take a hit on the capital gains, minus exclusion, of the whole proceeds. That's a further consideration for USA landlords/property owners.
That said, I do like the inflation protection typically received by real estate, and am hesitant to sell our residence at the bargain basement prices being offered in today's market. We are already cash heavy, perhaps too much so, and should we also figure out an area we want to go to regularly, we may consider buying another property...just for us, or to put on the 30+ day rental market for while we are not there. It's all about survival of these times for us as well, and looking at enjoying our assets rather than simply growing them.
IP
