What if it was a 1.2 million dollar place that was bought on a short sales basis for 700K. Perhaps a big piece of the depreciation has been accounted for. Additionally if you look at this over a 30 year period of time do you think it is going to lose value.
Real estate offers autocorrelation in a diversified portfolio. If you already own stocks, bonds, precious metals, oil, energy, foreign stocks than Real Estate can fit the bill for a small sliver of high net worth individuals.
Rather than buying REITS he has elected for a direct investment. He own the property. Maybe he plans on leaving it to his kids. Unless tax codes change the cost basis they get it out has a huge upside and that would be 20 or 30 years out.
