27 Years Old: Should I buy a House or a Lamborghini?

What's up you guys, it's Graham here. So this is one of these things that, you know, I was pretty well set on getting a Lamborghini until I got the money to get the Lamborghini, and now I'm just like, it's not the smartest thing to do. Are you sure about this? Because you could go and buy another house.

So this is one of these things, and don't worry, I'm not gonna be one of these dudes on YouTube that just like drags the topic of buying a Lamborghini out for like a year and then nothing ever happens. I'm not gonna do that. But I am at the point where I really do need to make a decision on which kind of path I'm gonna go.

I also feel like making a video like this is going to help clarify my thoughts, really putting it all out there. And I don't want this to be a video, by the way, where I just speak a mere. I really want this to be a little bit more of a discussion, so feel free to comment and let me know your thoughts and what you might be inclined to do. Like I said, I read everything; I take everything into consideration. So if you have any thoughts throughout this entire video, make sure to comment it down below.

And like I said, I read everything. By the way, I totally realized that at 27 years old, this is quite a unique and unfortunate situation to be in. Of all the things going on or that could be happening in my life, that one of my questions is should I pick a Lamborghini or buy another house? I totally get that. But at the same time, I would love to see all of you have the same opportunity at some point in the future, where you have the opportunity to pick: should I buy a Lambo or another house? Maybe if cars are not in the cards, that's totally fine, but at least I have the choice between the two.

So originally, the goal at the start of the year was to sell the Exige behind me and then buy a Lamborghini. Now, of course, there's gonna wait until I had the money to do that, and then I was just gonna go and do it. But what ends up happening, every single time I end up having enough money to buy a car like a Lamborghini, I end up just investing it instead.

And of course, now here I am again with the money to buy a Lamborghini, and here I am again questioning if that is really the best move to make at this point in my life. It's a bit of a toss-up for me between doing what I think is best financially or just saying, “Screw it,” and going and buying the Lamborghini or maybe the Mercedes SLS AMG or maybe like something in that range.

So when it comes to any sort of money or investment-related decision, I analyze everything extremely closely. I really come up with the best-case scenario, what’s the worst-case scenario, what’s the amount of risk involved, how much time is it gonna take me, how much money is it gonna take me, what can I realistically expect, what's gonna happen in the best-case scenario? Everything — I analyze it to a tee, and then I make a decision based off that.

I remember having this exact same thought when I was 21 years old. This is maybe 2011 or early 2012. I had about $200,000 saved up, and this was about four years' worth of savings working as a real estate agent at the time. I wanted to go on eBay and buy a Lamborghini or I wanted to buy like a Ford GT. I just—I really liked it. In the back of my mind, that was this fantasy that I could just be like, "Yeah, buy the car, do it." But instead of doing that, I ended up buying real estate, and that was one of the best decisions I have ever made, to not buy the car.

Real estate, by far, was a much more rewarding and better investment than, you know, buying a Ford GT. And then the same thing happened again when I was 25 years old. Same thing — I had this money saved up, and I was thinking, okay, I could just sit here right now and buy a used Mercedes SLR McLaren. But I didn't do that. Instead, I bought real estate. I bought another house, and that was one of the best decisions I have ever made because that house ended up making over $400,000 in equity since I had bought it.

And then this happened again not even 12 months ago. Again, I had all the money saved up, and I was thinking I could just blow it on the car, but I ended up getting a duplex instead, and that's where I'm now living, which pretty much now lets me live for free by living in the duplex, and it made money on top of that. So that, like, by far was the best decision again that I could have done, way better than buying a car.

And of course, here I am now with the opportunity again to get the car, or I can make again the smart financial decision to probably invest it in real estate. Now, a lot of this goes back to when I was 16. The car that was like my unobtainable dream car was the Lamborghini Murcielago Roadster. That was the car for me that you would see, and I would just flip out as a kid. I was the kid who you would hear it coming and be like, “What's that?” and would run out to the street just to get a glimpse. That’s the Holy Grail.

Since I was about 16, Lamborghini has always been one of these cars that just excited me. There’s just something about Lamborghini that just brings out the 16-year-old in me. So I was pretty well set on this, and then I test drove a 2014 Lamborghini Gallardo coupe the other day and was just incredibly disappointed. I actually really ended up hating the car. I mean, the Lotus Exige, in my opinion, was just—it was so much better of a car than the 2014 Gallardo coupe.

So that leads me to think I wouldn't be happy with a Gallardo, which means that I might have to try out a Gallardo Spider or a Performante or a Superleggera. Now I also test drove a Mercedes SLS AMG, which honestly, to me, was one of the perfect cars. Loved it. I loved the sound, the acceleration, the rarity, the uniqueness. I loved everything about this car. But I just—there’s something about it that I just don’t get the Lamborghini excitement as like when I was 16. This is really just like to feed the inner 16-year-old in me, just being that kid is like, “Yeah, you know I’ve got the Lamborghini.”

But it's still an amazing car. Let me know your thoughts, you know, comment down below. I did a thing on Instagram, and it’s pretty much almost 50/50 between the SLS and the Gallardo in terms of which you guys would prefer. So when it comes to actually owning one of these cars and buying them, here’s my reasoning behind it. A lot of these cars, when bought correctly, are not going to lose much, if any, value, especially in my opinion, the Superleggera and Performante Gallardo’s.

They’re a pretty specialty and niche car where someone is willing to pay a premium for that car. Even the 2008 Gallardo Superleggera's have rarely come down in value. They’re still hovering between about $130,000 to $160,000. So a 2011 to 2014 Superleggera or Performante, in my opinion, you buy these cars for about $150,000 to $160,000; they're really not going to drop that much in value.

Now, of course, the Huracan, in my opinion, is an all-around superior car in every single way. I just can’t justify spending $200,000 on a Huracan. It’s gonna go down in value probably another $30,000 over the next year. To me, that's like, okay, that’s crossing the line. I’m not gonna lose $30,000 in depreciation over a year versus the Gallardo Performante, or even if you buy like a $120,000 Gallardo Spider, like a newer year, if you can find something with reasonable miles, it’s really not going to go down in value very much.

At that point, the car pretty much just becomes a savings account for a few years, where you put your money. Instead of sitting in a savings account, it’s in the car. Instead, you drive it for a few years, and then you sell it for almost the same price you bought it for. And also, let’s be real here; from a branding standpoint, nothing quite has a draw or excitement as a Lamborghini does.

Now, it’s the same sort of situation with the Mercedes SLS AMG. I found a really nice car for about $140,000. I can’t imagine any reason it would drop any lower. So again, it would pretty much just be like a savings account, plus maybe some appreciation because I really feel that that car is a good investment. It just doesn’t quite have the same draw as a Lamborghini does.

That whole situation is fairly straightforward. If I ended up doing something like that, I’d probably put down between $60,000 and $80,000 and then just finance the rest of it. But like I said, I overanalyze everything, and these are my thoughts. If I were to invest the full purchase price of the car as a down payment in real estate instead, for the way I see it, interest rates are still pretty low.

It’s basically teetering on the point where I feel like I should be taking advantage of these low prices before they get much higher. Now, I personally believe interest rates will probably end up around 5% at the end of the year, at which point it’s gonna be a lot harder to justify buying some of these properties when my intention is really to hold it for 30 years.

So, the difference over 30 years between 4.5% and 5% can actually add up to something pretty significant — locking in a year from now versus doing it today. Now, one of the problems here, and this is my own fault, is that I like investing in Los Angeles. It’s the market I know the best. It’s a market I feel like has a ton of potential in terms of appreciation, but it’s also a market where it’s a needle in a haystack, especially today, to find something that even remotely makes sense as a rental property that I believe has enough equity in it after I renovate it and also is going to be in an area that’s going to be going up in value.

Realistically, at this point, the best-case scenario is I find a great property that breaks even cash flow-wise. Then, hopefully, it can end up making a little bit of equity at the very beginning when I buy it by renovating it and then hold it. Realistically, it's probably gonna take me four to five years to begin really seeing some cash flow from it as rents just increase around that area that I’m buying in. But on the flip side of that, I should be making about $600 a month in equity from paying down the loan, and I should be able to see about $100,000 in extra appreciation probably over the next three years or so.

With that, I’d be getting a great property in a really up-and-coming area of Los Angeles with a lot of development going on. The real potential in this is probably about five to ten years from now as the entire area just transforms and improves. And by the way, for anyone watching who’s in Los Angeles, the areas I really believe in are East Hollywood, West Adams, Jefferson Park, and Baldwin Hills. So there you go; go and make some money.

But given that, hypothetically speaking, there’s nothing really stopping me from waiting a year, year and a half, and trying to find a similar deal. The only variable at that point will really be what interest rates are. See, right now in Los Angeles, home prices are really being driven by an improving economy, low interest rates, and low supply of homes. From a buyer’s perspective, it’s actually just the low interest rate that really puts the pressure on a buyer: buying now today as soon as possible before interest rates inevitably go up.

That’s what’s causing a lot of people right now to just try to buy whatever they can to lock it in. In Los Angeles, we have a record low of supply, and we’ve never had so much demand before than right now. There is simply not enough homes to go around for all the buyers who want to buy them. So even with rising interest rates, that isn’t deterring any buyers. If anything, right now, they want to buy even more.

But the one thing I don’t really have a full grasp on is what’s gonna happen once rates exceed 5% and the cost of borrowing money just becomes a little bit too expensive. Is that going to mean that demand might wane a bit and slow down? But conversely, on the flip side of things, interest rates really only go up during an improving economy, where wages also are going up at the same time.

And also, generally speaking, historically, the cost of borrowing money with higher interest rates has no direct correlation with the price of real estate. It’s just a really small component of a much larger picture. And since real estate is such a localized game, the local economics, supply, demand, and future growth potential are much more important than interest rates alone.

This is where I really start to go down the rabbit hole in terms of over-analyzing everything. At this point, we’ve seen such an amazing run-up in the price of real estate. We came from a drastic overcorrection. We came out of such a recession and came back stronger than ever. But at the same time, I’m starting to see way more properties starting to come on the market. I’m starting to see a lot more flippers out there.

I’m starting to see a lot more people feel comfortable with moving because all of a sudden they’ve had all this equity built up in the property and they’re starting to take profits. There’s zero downward pressure on real estate prices besides maybe rising interest rates, which, at the same time, low supply is still keeping prices continually going up.

There’s a chance that rising interest rates will mean that we’re not going to see these huge 10 percent annual increases like we saw in the previous years. If anything, I think we’re gonna see some more predictable, sustainable, slower growth that’s still going to be pretty good over the next ten years or so. It’s not gonna be these drastic just like year-over-year gains, you know, probably depending on the area. But I think it’s gonna be a lot more sustainable.

That makes me think maybe now is the perfect time to go and buy a Lamborghini or like an equivalent car like that—basically put all my money in the car, continue saving, and then after two years or so, sell the car and reinvest back in the market. But the one thing is that the sub $700,000 market here in Los Angeles is absolutely unstoppable.

Even with rising interest rates, there is ZERO downward pressure on homes under about $700,000. Even as interest rates go up and things become way more expensive, all of a sudden the $1 million buyers, the $800,000 buyers, they look to the $700,000 homes as being better deals, which then drives the prices up of those $700,000 homes because all of a sudden, more people are competing for the lower end, and the lower end has more room just to go up because not that many people are looking at that market.

A lot of the buyers right now are really looking between about $900,000 to about $1.3 million for the average buyer here in Los Angeles. The $700,000 market? Too many people are overlooking that, and people are just starting to realize how much opportunity there is right now. I believe that real estate prices here in LA will, at the worst-case scenario, just keep pace with inflation over the next few years.

Worst-case scenario, that’s just what I believe. There’s got to be a lawyer out there that’s being like, “Graham, you have to tell them that this is not investment advice.” So guys, this is not investment advice. This is purely my opinion. Invest at your own risk and whatever else YouTubers say to not get sued.

But you know, yeah, investing your own risk, purely for entertainment purposes only. There we go. Now, even if we look at a similar market like San Francisco, you can see the downturns don’t really last that long, and they typically are about 10% before they begin to recover.

But on a normal recovery time, a 10% decline over a few years is really no difference for someone who’s planning to buy and hold it long-term anyway. It really doesn’t make that big of a difference. But even assuming this, it would be like buying a Lamborghini in the year 2000 and then reinvesting in real estate in 2003, where pretty much it’s a break-even, and I’d have the opportunity to own a Lamborghini for a bit.

Now, LA is a bit similar to this, but I believe it’s its own specialty market where individual neighborhoods and areas are their own little microeconomy that are each gonna have their separate pros and cons and flaws and advantages. So those are my thoughts when it comes to analyzing the real estate side of things.

Now, everything I’ve done in the past, I’ve always prioritized investing first, car second, and I have never once regretted that decision. But this is the first time in my life where I felt like there’s very little financial disincentive just to say, “Get the Lamborghini, have it for a few years, and then reinvest afterward.” Or maybe I could do the Mercedes SLS AMG, which is an amazing car. I absolutely love it; it just doesn’t quite excite the 16-year-old in me.

A lot of this is just to excite the 16-year-old kid in me that’s always wanted a Lambo. Or I can just continue to do what I was doing and just take the financially responsible route throughout my 20s and just invest everything I have. I can buy another property, even though it’s probably gonna break even cash flow-wise, and then maybe by, you know, 10 Lamborghinis in the future.

And of course, there’s nothing stopping me from just saving up and buying a Lamborghini in the future. In the meantime, I've got this amazing Exige behind me that I absolutely love. But I’m also one of these people that I just love practicing what I preach, and I tell everybody just to invest as much money as you can in your 20s.

It should really just be about investing and then reinvesting and continually reinvesting. By doing so, you can be financially independent and really do whatever the heck you want later and buy as many Lamborghinis as you want later. But now is the time to really hunker down and really make investing a priority.

So it feels really weird to me to consider being in a position where I'm not investing all of my money and getting a car. But that also makes me think, you know, at what point is enough enough? At what point can you justify buying something extravagant just because you want it?

I’m not gonna lie—I mean, we all know from a branding standpoint, nothing quite has the impact like a Lamborghini, which could actually end up making more money just from purely a branding standpoint. And I’m one of these people—I’d rather take a pretty conservative approach and do really one or the other at this point.

I mean, who knows what the position is gonna be like at the end of the year? But at this point, it’s really do I go left or do I go right? So with that said, I think I went into way more detail than what I was originally anticipating. But let me know down below what you would do.

I would sell the Exige, probably end up with a Lamborghini Gallardo Superleggera Performante, or maybe the Mercedes SLS AMG, or I can keep the car and just invest in real estate, or I can keep the car and maybe just wrap it in some like absurd stupid color. You know, and that would be fun enough, and then maybe get the Lamborghini in the future.

And by the way, again, I'm not gonna be one of these people that's just gonna like drag this out for months. I’ll, you know, come up with the decision, and you know that’s gonna be my decision. And by the way, like a bit of me is afraid I hope this video did not come off in the wrong way.

I figured I would just share my perspective and what thought processes go through in my head in terms of making a decision because, you know, it’s a big purchase to me. I really don’t spend a lot of money when it comes to the service. Everything I spend, I really just see as an investment, and the Lamborghini is one of the few things that I’ve wanted for a long time. But it's just—it's hard for me to get over that mental hurdle of just dropping that amount of money in a car when I could be buying real estate with it instead.

So at least this is my thought process. I hope it doesn’t come off as me being crazy first-world problems or anything like that. These are just thought processes that go on in my head, and I figured I’d, you know, just record it because that’s what I do.

So anyway, you guys, thank you so much for watching. If you haven’t already subscribed, make sure to smash the subscribe button, and also feel free to add me on Snapchat and Instagram. I post pretty much daily, so if you want to be a part of it, feel free to add me there. Thank you again for watching, and until next time.