I will always believe in the power of truth and that the words we say are stronger when they come from a place of truth. However 100% verifiable truth isn’t always possible. This morning I spent a good amount of time Googling the average appreciation of a home and the average appreciation of rent over the last 20 years, because I know they increase at different rates.
The issue is AI. Mainly guardrails. One of the most dangerous things people do when investing is invest in a state of euphoria or what the kids ten years ago called FOMO. Therefore AI understates historical returns on investments. It does this to protect people from themselves, and it is one of the most harmful aspects of AI.
Googling have more of an AI search than a regular search led me to doubt the answer. Reddit banning Google AI might be the best thing that could happen to the internet. As with regular search we can filter out the Bob’s Discount Blogs of the world in favor of more reputable sources. AI just goes to Reddit and searches through what amounts to a 1997 chat room or message board for its information.
Now that isn’t to say that homes now appreciate at 3-5% instead of the 6-10% it was when I took real estate classes in 2010. It could have changed, but I find it hard to believe when the 2020 home price explosion happened and 2010 was just two years after the housing crisis. Or those are Northern Virginia only numbers and the national average is different.
Still Reddit isn’t a great source for this information. Which finally brings me to the power of convection and the danger of trying to be 100% correct. Whatever the online numbers say the fact is that equity and rent appreciate at different rates, and if property is held long enough then there will be an NOI and cap rate mismatch, and those are the people I am looking for to attend my seminar on a 1031 exchange.
This is also why joining a networking group is a good idea. It helps clarify thoughts when trying to take a passive income business and give it an active income wing.
David Huzzard Writes 