Is Real Estate Investing Inherently Evil?

I saw this article recently online. Here's the headline and the first part of the story:

That's an interesting premise – but is it actually accurate? Are real estate investors innately evil?

Real estate is what makes civilized society possible

Without real estate investing, we would all be living in caves. While some may like this option because they like camping, this is not a way for the majority of humans to live. We want a nice home, schools for kids, hospitals for healthcare – all kinds of stuff. But none of this is possible without real estate investment. In its absence, all you have is a hunter-gatherer society living in caves and huts made of tree limbs. So you can't knock real estate or your knocking the collective civilization of the world.

All industries attempt to make money – that's the capitalist system

It's also unfair to put real estate down because it makes money. The fact that real estate is "the best performing investment in modern history" is no reason to be ashamed – it's a compliment. The American concept of "capitalism" is based on the action of trying to make money. That's what the petroleum, food, manufacturing, service and media industries are all about, as well. And the fact that rich people invest in real estate simply means that it's a good idea, not an evil one.

The real estate business model is just smarter than the others

What many don't understand about real estate is that it's just basically "smarter" than other industries for several important reasons:

• It allows you to leverage your investment with bank debt, which yields much higher returns than industries that only allow you to buy with all cash.
• It is an excellent hedge to inflation, and that's what created a huge amount of real estate wealth over the last several decades. It's just protected from economic problems in a superior manor.
• It remains always in demand because it's a basic industry and a basic staple of life. It's not subject to new technology breakthroughs or fads.
• It is backstopped by a precious commodity. When you own a stock you own a sheet of paper. When you own real estate you own something of intrinsic value.

It's not just all about the rents, but instead the "value"

Many people misinterpret the real estate business model and think that it's all about raising rents. It's not. While raising rents is important to making money, you cannot raise rents without increasing the customer's satisfaction at the same time. This is called "value". Most people would rather live or work or play in a property that is more aesthetic pleasing, better maintained and better managed. They are willing to pay up to do so. If a rent goes up $100 per month but the "value" seems to the customer to be worth $100 per month extra then everything is in balance.

Those who don't offer "value" never succeed long term

Of course, there are some who don't put anything back in their properties. But the problem for these investors is that their customers will grow tried of this one-sided relationship eventually and move on to a different property. Those who succeed in real estate realize that the customer is #1 and focus on making them happy above all else. That's the only business model that works.

Real estate is probably more of a win/win business than almost any other

Because of it's huge importance in everyday life – and it's place in society as one of the largest ticket items most Americans face as consumers – it also holds the greatest promise as a win/win business model. With so much at stake, property owners need customers as bad as the customers need them.

Conclusion

There is absolutely nothing "evil" about real estate. On the contrary, it's more of a noble pursuit that benefits all that come into contact with it. That being said, it's a very smart business model that many envy and some try to label as being wrong because of sheer jealousy.