Recently, I've been thinking about how young people in the crypto space, like shrimp 🍤, have become quite wealthy but are reluctant to buy houses. In fact, it seems quite rational; it’s not just properties in the University of Tokyo that are bad assets, but real estate worldwide is generally pretty poor.

The biggest appeal of real estate is that when you don’t have much money, you can leverage yourself beyond your ability to bet on one side, a.k.a. fraudulent loans. After all, no financial institution will lend you 10 million with a 3% interest rate to buy crypto, and to qualify for a 10 million loan, you would need to have a compliant income covering at least 100,000 a month. I dare say that 60% or more of such claims are based on fraudulent documents.

However, the quality of the asset itself is actually quite poor. Those who have played with NFTs understand that it's next level; liquidity, control, 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 start; once it gets going like a train, it’s hard to stop immediately. If it hasn’t risen by the first 10%, then don’t buy.

As the asset scale increases, the quality of real estate assets will deteriorate further because maintaining leverage when buying luxury homes is very difficult. It’s quite hard to take out a loan of 50 million for a penthouse.

Another approach is the landlord model with rental offsets. If you go to high rental yield areas, like the Midwest of the United States, and apply the BRRR method, the maintenance costs can be ridiculously high. Engage in activities that match your worth; don’t spend every day painting walls and renovating. Although it’s rent offsetting the mortgage, the population growth isn’t great, and price increases are quite limited. Even we, the crypto folks, can easily outperform those landlords struggling by painting walls and laying floors.

The only potential benefit might be to solidify a portion of your assets to prevent falling back into poverty. For shrimp 🍤 types, having some stocks serves a similar purpose, but I don’t quite understand leveraging stocks.