a) leverage cuts you both ways. Great when the market goes up, terrible when it goes down (particularly with a Loan-to-Value ratio of 90%).

Not exactly. Only if you sell.
My strategy is to buy and hold--pretty much forever.

I get to get the leverage benefit and flip something if there is an opportunity and if not it's still a great cash flow deal to hold onto.

I also get to have depreciation which I never pay back.

I get what you are saying, but when you invest in real estate properly--not speculate--it's about cashflow, not appreciation.

Appreciation is a bonus you sometimes get but don't rely on.

Over a long period of time--say 20-30 years--you'll get appreciation in almost all cases, but never count on it for the short term.

a') futures or broker margin trading give you leverage in other markets, too. Doesn't mean it's prudent.

Yes. Different kind of leverage though.

Risk in real estate is essentially capped. It's like having a hedge in options or futures trading.

BTW, I've done both. I've traded all kinds of complex spreads. Real estate is much better--trust me.

b) much harder to diversify, because of the big chunks (you can buy shares for 5k, but not a house. You can sprinkle 100k into different equity/debt markets in different countries, but not into many houses in different countries).

Yes, but also less critical if you are talking about cash flow and in it for the long haul.

I am diversified over 26 rental property units in two spots in the country.

Yes, really bad things could happen, but it's very unlikely.

There will always be some risk.

c) massive transaction costs. Round trip can be 10% or more.

Yes. Definitely.

That is why buy and hold. Flippers get stuck holding the bag.

Really good point though. People need to understand this when investing in real estate.

d) much less liquidity. If shit hits the fan, you can sell shares and have cash at hand in a few days. Try that with a house.

Yes, another great point.

You need to have cash reserves if you invest in real estate. Don't lose all your liquidity and get in a squeeze.

I keep plenty of cash on hand or in a more liquid investment for emergencies.

Great point.

f) again, regarding diversification: you could get bad tenants that trash the place and/or don't pay rent. If you own a large number of properties, it's a quantity you can average over and deal with. If not, it's a gamble.

True again, but this can be highly mitigated with skill and volume.

I've been holding properties for about 18 years. I have not had more than $4k of damage done at once.
And there are remedies.

Mostly this is a non-issue.

Don't buy expensive interiors. Buy middle-end and mitigate possible damage.

Another really good point though.

g) rates are pretty much as low as they can go (though, to be fair, everyone's been saying that for some 7+ years now...) but seriously, they'll have to come up. That would put pressure on real estate prices. (Of course, you can avoid liquidity issues with fixed rate mortgages, that's prudent, as long as rents hold up).

Yes and no. Could actually go lower. I don't think it will.

Most likely they will go up.

Never in history been a better time to buy in my opinion.

Don't know if we'll see rates this low ever again.

Again, I don't care about prices. I care about cashflow.

h) inflation has not really been an issue for several decades. It is prudent to keep it in mind, though, but clearly real estate is not the only real asset.

True, but when rates go up. It will be.

And when it does if you get caught with your pants down, it hurts really, really bad.

i) Lastly, there might be something of "picking up pennies in front of a steamroller" to it. I have no doubt that what you are saying is accurate - but you might have been lucky, and avoided a massive downside. And clearly, it is not a feasible strategy for everyone to own 26 properties and rent them out (because someone actually has to live in them and pay rent...)

Not everyone can do it, not everyone will.

But there is a huge opportunity here.

I've survived the good and bad. Solid strategy will give good results with minimal risk.

Most real estate investors don't have solid strategy.

Thanks for bringing these things up.