In recent years, the investment landscape has been transforming, with an increasing number of investors turning to Bitcoin as a preferred investment option over traditional real estate. As a former real estate investor who has shifted to Bitcoin, I’d like to delve into the reasons behind this change and explain why I believe Bitcoin is a far superior real property investment.
One of the main advantages of real estate investments is the generation of cash flow. However, when considering factors like capital expenditures, deferred maintenance, property management, taxes, and insurance, the net cash flow can be significantly reduced. In contrast, Bitcoin has none of these expenses, and while it doesn’t generate cash flow itself, its value has consistently outpaced inflation.
Another point in favor of Bitcoin is the concept of an infinite return. While real estate investors can achieve this by using other people’s money to buy properties, Bitcoin allows for infinite returns without resorting to rent-seeking behavior. Furthermore, Bitcoin’s digital nature means it’s not subject to physical depreciation, making it a long-lasting asset that will continue to exist indefinitely.
Real estate investments have long been seen as a hedge against inflation, with investors utilizing fixed interest rates on mortgages to have inflation effectively pay off their loans. However, Bitcoin has proven to be an even more effective hedge, as it can be owned outright and has consistently demonstrated strong returns far exceeding inflation rates.
When comparing the annual returns of real estate and Bitcoin, it’s clear that Bitcoin comes out ahead. According to getricheducation.com, real estate investments provide an annual return of over 30%. In comparison, Bitcoin has shown an average annual return of 131.7%.
Tax benefits are often cited as a significant advantage of real estate investing, with laws like the 1031 exchange allowing investors to defer taxes on gains. However, Bitcoin offers a level of freedom and autonomy that real estate cannot match, as no government can dictate what you do with your digital property.
As a hard, digital asset, Bitcoin has consistently outperformed real estate over the past 14 years, and it still has plenty of room for growth, with less than 5% of the world’s population having adopted it. Additionally, Bitcoin’s scarcity and location on an immutable ledger in cyberspace make it an incredibly valuable and desirable asset.
Rental income from real estate depends on a property’s location, desirability, and the number of units available. However, Bitcoin offers the opportunity for income generation through its infinitely divisible, high-frequency nature.
Real estate can be insured and protected against various damages, while Bitcoin’s security relies on the owner’s responsibility and the world’s most powerful computer network. This “responsibility go up technology” encourages users to take charge of their investments and protect their assets with a seed phrase.
In conclusion, the primary advantage that rental properties offer over Bitcoin is cash flow. However, with the ever-increasing inflation rate and the declining value of cash, real estate’s cash flow advantage is rapidly diminishing. Bitcoin presents a self-sovereign investment opportunity that fosters a mindset of value for value, without having to rely on rent-seeking behavior.
Skeptics argue that Bitcoin’s return on investment is not guaranteed or as reliable as cash flowing real estate. In a world where fiat currencies are collapsing, it’s essential to ask, “What is guaranteed and reliable?” With its hard cap supply of 21 million units and consistent block creation, Bitcoin has proven itself as a reliable and valuable investment option that outshines traditional real estate.
This article is based on Jeremy Garcia’s twitter thread