{"id":20348,"date":"2019-10-14T09:36:31","date_gmt":"2019-10-14T09:36:31","guid":{"rendered":"https:\/\/adamfayed.com\/?p=20348"},"modified":"2025-03-26T12:38:04","modified_gmt":"2025-03-26T12:38:04","slug":"why-you-can-lose-money-on-property-with-3-capital-gains-6-net-yields","status":"publish","type":"post","link":"https:\/\/adamfayed.com\/it\/real-estate\/why-you-can-lose-money-on-property-with-3-capital-gains-6-net-yields\/","title":{"rendered":"Why you can lose money on property with 3% capital gains + 6% net yields"},"content":{"rendered":"<p>Understanding why you can lose money on property with 3% capital gains + 6% net yields is crucial for effective <a href=\"https:\/\/adamfayed.com\/it\/investment-options\/offshore-investment-bonds\/\" data-type=\"link\" data-id=\"https:\/\/adamfayed.com\/investment-options\/offshore-investment-bonds\/\">overseas investment management<\/a> and maximizing your financial opportunities.<br><br>I got a big reaction, mainly of shock, when I said online today that it is possible to lose money on property even if you get 3% net capital gains + 6% rental yields.<\/p>\n\n\n\n<p>This was after I gave the example of somebody who moved to a country like Georgia, for tax reasons, as they levy 0% tax on overseas income in return for a $100,000 investment into real estate.  <br><\/p>\n\n\n\n<p><strong>Let&#8217;s go over the numbers again starting with some assumptions:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You can&#8217;t get a mortgage as a non-Georgian. So you can&#8217;t leverage your gains.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The 6% yearly real estate yield is net of fees like taxes (up to 1% per year), maintenance (1%-2% per year) and other fees. So gross 9%-10% per year.  Optimistic but possible.  <\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You will reinvest the $6,000 rental yields (6% of $100,000) into index funds. You will get 8% yearly for 30 years. Remember, this is a full 2% lower than the historical average returns on the S&amp;P500, Dow Jones and about 4% less than the Nasdaq has produced for 25 years.  So actually very conservative.  <\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Now let&#8217;s compare two people.<\/strong><\/p>\n\n\n\n<p><strong>Person 1:  <\/strong>Invests $100,000 in the S&amp;P500 and gets 8% for 30 years.  = $1,006,265 in 30 years <\/p>\n\n\n\n<p><strong>Person 2:  <\/strong>Get&#8217;s average 3% yearly for 30 years on the property. So after the 30 years, the property is worth $242,726. They then invest the $6,000 a year into the same investments as person 1, and they get $734,075 ($6,000x30x8%). So they have $976,801 total.  A full $30,000 less for more work and hassles. <\/p>\n\n\n\n<p>Now of course, there are so many unknown unknowns here. Georgian property might go up more than 3%, and the S&amp;P500 might go up 10% or more yearly, like it has in the past.<\/p>\n\n\n\n<p>In this example,  moreover, there is the tax benefit of moving to a lower cost country, which might make up for the 30k loss.<\/p>\n\n\n\n<p>However, this simple example does show:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Without leverage from a property or significant luck on the capital appreciation side, it is almost impossible to beat passive investments with property.  <\/li>\n\n\n\n<li>Also remember, in other property markets, you might be able to get leverage, but might not get the 6% net yields, like you can in Georgia <\/li>\n\n\n\n<li>If you adjust for time commitments, the figures would be even more damning.<\/li>\n\n\n\n<li>The data is publicly available.  So if investing in Georgian, London or Californian property was such a no-brainer, why isn&#8217;t everybody doing it?  <\/li>\n\n\n\n<li>Think only stupid people lose money in property?  Watch the documentary below. The founder of the non-for-profit (Abraham George) sold his business in the 90s to a Fortune 500 firm. He lost almost all his capitals on US beachfront property (he couldn&#8217;t find a buyer even to this day).<\/li>\n<\/ol>\n\n\n\n<figure class=\"wp-block-image is-resized\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-19-1024x576.jpg\" alt=\"\" class=\"wp-image-20353\" style=\"width:469px;height:auto\" srcset=\"https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-19-1024x576.jpg 1024w, https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-19-300x169.jpg 300w, https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-19-768x432.jpg 768w, https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-19-81x46.jpg 81w, https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-19.jpg 1920w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>Still like property investments?  Well, many REITS pay a yield of 4% net and have increased by an average of 6% in the last 5 years &#8211; more if you take account of the last 35 years where some have increased by 1000%:<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" width=\"642\" height=\"396\" src=\"https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-6.png\" alt=\"\" class=\"wp-image-20351\" srcset=\"https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-6.png 642w, https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-6-300x185.png 300w, https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-6-133x83.png 133w, https:\/\/adamfayed.com\/wp-content\/uploads\/2019\/10\/a1-6-81x50.png 81w\" sizes=\"(max-width: 642px) 100vw, 642px\" \/><\/figure>\n\n\n\n<p>10% yearly returns if you reinvest the dividend for clicking a few buttons on your screen.  <\/p>\n\n\n\n<p>Much easier than hearing your tenants&#8217; dog has chewed up the rug yesterday!<\/p>\n\n\n\n<p>To find out more about <a href=\"https:\/\/adamfayed.com\/it\/real-estate\/how-to-invest-in-real-estate-online-and-without-being-a-landlord\/\" data-type=\"link\" data-id=\"https:\/\/adamfayed.com\/real-estate\/how-to-invest-in-real-estate-online-and-without-being-a-landlord\/\">investing in real estate without the hassles of being a landlord<\/a>, click the link.<\/p>\n\n\n\n<p><strong>Siete afflitti dall'indecisione finanziaria? <\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" width=\"512\" height=\"288\" src=\"https:\/\/adamfayed.com\/wp-content\/uploads\/2025\/03\/Adam-Fayed-Contact_CTA3-512x288.jpg\" alt=\"\" class=\"wp-image-117505\" style=\"width:683px;height:auto\" srcset=\"https:\/\/adamfayed.com\/wp-content\/uploads\/2025\/03\/Adam-Fayed-Contact_CTA3-512x288.jpg 512w, https:\/\/adamfayed.com\/wp-content\/uploads\/2025\/03\/Adam-Fayed-Contact_CTA3-300x169.jpg 300w, https:\/\/adamfayed.com\/wp-content\/uploads\/2025\/03\/Adam-Fayed-Contact_CTA3-768x432.jpg 768w, https:\/\/adamfayed.com\/wp-content\/uploads\/2025\/03\/Adam-Fayed-Contact_CTA3-scaled.jpg 825w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><\/figure>\n\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/adamfayed.com\/it\/become-adams-client\/\">Diventa mio cliente<\/a><\/div>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/adamfayed.com\/it\/good-match-quiz\/\" target=\"_blank\" rel=\"noreferrer noopener\">Fare il quiz sull'idoneit\u00e0 del cliente<\/a><\/div>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/adamfayed.com\/it\/contact\/\" target=\"_blank\" rel=\"noreferrer noopener\">Contatto<\/a><\/div>\n<\/div>\n\n\n\n<p><strong>Adam \u00e8 un autore riconosciuto a livello internazionale in materia finanziaria con oltre 830 milioni di visualizzazioni di risposte su Quora, un libro molto venduto su Amazon e un contributo su Forbes.<\/strong><\/p>","protected":false},"excerpt":{"rendered":"<p>Understanding why you can lose money on property with 3% capital gains + 6% net yields is crucial for effective overseas investment management and maximizing your financial opportunities. I got a big reaction, mainly of shock, when I said online today that it is possible to lose money on property even if you get 3% [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":20352,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"facebook_10166176115445471_100883565069113":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[11545],"tags":[75],"class_list":["post-20348","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate","tag-investing-in-real-estate"],"_links":{"self":[{"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/posts\/20348","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/comments?post=20348"}],"version-history":[{"count":2,"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/posts\/20348\/revisions"}],"predecessor-version":[{"id":121756,"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/posts\/20348\/revisions\/121756"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/media\/20352"}],"wp:attachment":[{"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/media?parent=20348"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/categories?post=20348"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/adamfayed.com\/it\/wp-json\/wp\/v2\/tags?post=20348"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}