Elimination mortgage interest deduction increases homeownership

This seem paradoxical on the surface, but makes sense in this light:

Eliminating the mortgage interest deduction causes house prices to decline, increases homeownership, decreases mortgage debt, and improves welfare. Our findings challenge the widely held view that repealing the preferential tax treatment of mortgages would depress homeownership.

via Eliminating the mortgage tax deduction could boost homeownership at Marginal REVOLUTION

Not near a real estate peak

However – even though investment in single family structures has increased from the bottom – single family investment is still very low, and still below the bottom for previous recessions as a percent of GDP. I expect further increases over the next few years.

via Q4 2017 GDP Details on Residential and Commercial Real Estate at Calculated Risk

Alternative Investment Options

Alternative investing, meant to include anything not traded on the traditional finance exchanges, are enticing to small investors because of the potential for more control and greater upside. This typically comes in exchange for more volatility and/or less liquidity. Essentially, there’s a cost for investing in public markets due to the ease of access and liquidity and alternative investments should seek the investments that may be a little harder to reach and get greater returns.

With that in mind, here’s a few ideas on alternative investment options:

  • Real estate. The biggest alternative investment market. Many different ways to invest from very hands, fix and flip, to passive investments in real estate projects. Lots of potential to use leverage. Many online tools have become available to help investors find projects. Returns often not as good as what can be found by networking for deals.
  • Crypto. New market that went from ~$15 billion to $500 billion in 2017. Lots of potential to invest still. Bitcoin and ethereum have potential. More exciting is new technology will result in some big winners. Finding the best tokens is very difficult. Very risky overall.
  • Forex. Never interested me much as it seems there is always somewhat limited upside. Seems not meant for passive investing but active trading.
  • Peer-to-peer lending. Appears quite risky but have not looked into it much.
  • Angel investing. Many online tools for investing in new businesses. Very limited liquidity. Potential for big gains. Very volatile.
  • Buying businesses. Not necessarily passive, amount can be determined by owner. With right criteria, risks can be mitigated. Some potential for leveraging money. Can result in cashflow or flip for a big payoff.

We’ve already invested in some of these and we’ll look at some of these options in more detail with new posts over the coming weeks and months.