Recently, I've been thinking about how young people in the cryptocurrency world, much like little shrimp, have become quite wealthy but are unwilling to buy houses. In fact, it's quite rational, and it's not just properties in Tokyo; real estate around the world is generally a pretty terrible asset.

The biggest appeal of real estate is that when you have little money, you can leverage it in a way that doesn't match your own ability to take a one-sided gamble, a.k.a. fraudulent loans. After all, first, no financial institution will lend you 10 million with a 3% interest rate to buy cryptocurrencies, and second, to qualify for a 10 million loan, you need to show a compliant monthly income of 100,000. I dare say that over 60% of the documentation is likely to be fake.

However, the quality of the assets themselves is actually quite poor. Those who have played with NFTs will understand that it's all next level; liquidity, control over the market, transaction costs, and maintenance costs are all quite terrible. The upside is that the winning probability on the right side is not low because it’s difficult to get started; once it gets going, like a train engine, it’s hard to stop immediately. If it hasn’t increased by the first 10%, I won’t buy.

As the asset scale increases, the quality of real estate assets will deteriorate further because maintaining leverage while buying luxury properties is incredibly difficult. Taking out a loan for 50 million to buy a penthouse is really hard.

Another approach could be the landlord model to offset costs. If one runs to high rental yield areas, like the Midwest of the U.S., and engages in the BRRR strategy, the maintenance costs are insanely high. It’s better to do things that match one’s value rather than painting walls and renovating every day. Moreover, although it's rent offsetting the mortgage, the population growth isn’t very promising, and the price increase is quite limited. We crypto folks could easily outperform those landlords who are struggling by doing their own renovations.

The only potential benefit might be to retain a portion of assets to prevent falling back into poverty. Little shrimp diversifying with some stocks can serve the same purpose, but I really don’t understand leveraging stocks.