Hello, everybody. It's Sam from Financial Samurai. And in this episode, I want to talk about investing FOMO, but specifically housing FOMO, because I think housing FOMO, or the fear of missing out, might be the most dangerous type of FOMO there is. And I was catching up with my softball buddy, who has been in Tesla stocks since 2018.

It's done well, unfortunately, 2021 has been terrible for growth and tech. And I just couldn't understand why he wouldn't take my advice and invest in housing in 2020. Because we were literally at batting practice every week, we're talking about our investments, we're talking about housing, he had gotten married a year earlier.

And I realized why he's not as enthusiastic. He's not enthusiastic, one because he doesn't like to pay property taxes, which is definitely a negative for real estate versus stocks. But he's not as enthusiastic because he doesn't have kids yet. And it was kind of my aha moment to try to understand why I wasn't able to convince him to go long housing in 2020.

And even in 2021, he's not very enthusiastic either. Whereas it seems like the whole nation, North America, all around the world, people are. My friend is 38 years old, his wife, I think is 30 years old. So they have plenty of time to have kids if they want. The point I'm trying to tell him now is that you should probably go long before having kids if you want to have kids.

Because once you have kids, something happens to our brains. I mean, correct me if I'm wrong, parents. But there is this intense, intense desire to nest, to buy property to shelter your most precious asset, which is your baby. So greed, I think can definitely explain housing FOMO. But I think it's kids having kids is what really moves the needle and makes people kind of nuts and overbid on properties they probably shouldn't have.

You know, if you're in a bidding war with 10 other people, and you win, I'm not sure if that's a good idea, because that means only you were willing to pay that price out of nine other people, right? So in that sense, you are creating new highs in the market, probably.

And you've got to really be comfortable with your job situation, your investments, and your desire to live in that area for at least probably at least three years, if not five or 10 years, to be able to make money from your house. Before I had kids, folks, I didn't really care if the house was within walking distance of a good elementary school or middle school or high school.

Before I had kids, I didn't really care if my yard wasn't that big or wasn't really on a flat lot. I just wanted something great to live in that would hopefully go up in value over time because I was trying to build my wealth and my passive income streams for retirement.

And now that I have kids, the way I look at potential properties to buy is a little bit different now. It might be a lot different. I still go through the numbers. I try to do a blue sky scenario, a realistic scenario, and a bear market pessimistic scenario to make sure that I can survive those bad times.

But when I look at a property, I look at the layout. So in the kitchen, if I'm washing the dishes or whatnot, I can hopefully still see the kids running around in the living room or the dining room area. So in other words, I'm looking for an open floor plan.

In terms of outdoor space, I'm looking for as much outdoor space as possible, hopefully on as much flat land as possible. In terms of decks, I love decks, indoor, outdoor living. It's the Hawaiian way, the lanai's because it's always nice and warm. Well, in San Francisco, it's not always warm, but it's pretty nice.

And I love that indoor, outdoor living. And I love homes with decks on every single level. However, now that I have kids, you know, decks might be a little bit dangerous if they're very, very high up from the floor below. And I also look at the railings. Are they horizontal or vertical?

Are they narrow enough so the kids can fit through? All these little things change once you have kids. But the biggest thing, the most important thing is that I want property more. I desire property more because it provides more utility because it is housing more heartbeats, more people. And given young kids are so helpless, it just feels like you want to have a fort, you want to have the most expansive house with the tallest walls and the safest environment you can provide for your family.

In conclusion, I would say you should probably buy a house before having kids if you know you plan to have kids. And if the kids never come, well, at least you'll have a property that you'll enjoy that will hopefully appreciate and value if you follow my 3033 rule for home buying and don't overstretch.

At the same time, if you're a real estate investor, it's important to understand demographics. And unfortunately, during the pandemic, there's been a baby bust, not as many families and couples are having kids. So maybe in 3040 years, there's also going to be a drop off in housing demand. We don't know exactly what's going to happen in that far in the future.

But that might happen and might hurt housing. At the same time, I think real estate has become a part of more and more Americans retirement investing portfolio, right in the past, we would just buy a primary residence and pay it off after 30 years or hopefully before 30 years.

And you can live very cheaply and very comfortably in your largest asset. But now things are a little bit different. To go long real estate, people are buying more than the primary residence. And instead of one person buying one property in the future, it might be one person buying 1.2 properties in the future 1.5.

And that multiplier effect probably will increase, given its human nature to try to accumulate more assets over time as they get wealthier. I want to leave you guys with an analogy regarding buying property when the woman is pregnant or when you've just had a baby. It's exactly like going to the supermarket after not eating all day, or maybe two days, you're just rabid.

And you irrationally start gathering and buying all these things you think you'll need that you probably don't really need. And you're more apt to overbid on a property. So for those of you out there looking to buy property, please stay calm and run the numbers. And for those of you who are long property, I would just keep on riding this wave.

The double digit returns, the price gains aren't going to last because of the base effect. Surely the price growth is going to decelerate. It just cannot go at this rate. But I still think we're going to see mid to high single digit year over year price increase over the next three years.

All right, folks, thanks for listening. I hope you enjoyed this episode. I'm going to try to record more episodes going forward, but shorter in nature because they're easier to record. More pithy under 10 minutes that has a key point and something interesting to talk about during the times. If you enjoyed this episode, I'd appreciate a positive review and a comment.

It's a motivating factor, man. It's been a long pandemic, 14 plus months, folks. I think we're almost there. Let's let's hang in there. Take care.