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The Owner's Invisible Losses
When calculating real estate yields, people often forget about the time value of money. Over 5 years of owning an apartment that nominally appreciated in price, the real purchasing power of that money could have fallen due to inflation.
If rental payments are not indexed annually (and the market rarely allows for aggressive indexing), the real cash flow from rent shrinks every year. You are becoming poorer, even if the apartment seems like an "asset."
Owning an asset that requires constant subsidies for maintenance while losing real value is a poor strategy.
The tenant maintains flexibility, leaving the risks of asset devaluation on the owner's shoulders.
#financialliteracy #risks #realestate