What is Naval's perspective on the role of "real estate" in wealth accumulation?

Here’s the translation:

Ha, that's a great question because Naval's view is quite different—and counterintuitive—from the traditional idea of "building wealth through real estate." But once you grasp it, it feels enlightening.

Let me break it down in plain language to help clarify.

Simply put, Naval doesn’t consider real estate "bad." Instead, he sees it as an older, less efficient wealth-building game. Today, we have better and more efficient games to play.

His perspective can be broken down from a few angles:

1. The Nature of Leverage Has Changed

For our parents’ generation, the core tool for building wealth through real estate was leverage—using bank loans to buy assets far exceeding their cash reserves and waiting for appreciation. This is the classic capital leverage.

Naval fully acknowledges this power. But he points out that in the internet age, two new, more powerful types of leverage have emerged:

• Code Leverage: You build software or an app that can serve thousands worldwide 24/7, with near-zero marginal cost to add a new user.
• Media Leverage: A podcast, video, or article you create can be consumed repeatedly by countless people, also with near-zero marginal cost.

Real estate leverage (mortgages) requires "permission" (bank approval) and is limited in scale (you can’t borrow infinitely). But code and media leverage are "permissionless" and infinitely scalable in theory.

So, why play the old game with permission gates and poor scalability, Naval argues, when you can play a new game where creativity and skill amplify your impact limitlessly?

2. Is It an "Asset" or Another Job?

Naval defines wealth as "assets that earn money while you sleep."

Now, let’s examine "investing in property":

• If you buy a home to live in, it’s a consumption item—not an asset—as it costs you money (fees, maintenance, depreciation, etc.).
• If you buy to rent it out, aiming for "passive income," reality hits: finding tenants, collecting rent, handling disputes, fixing leaks or broken AC units... This sounds more like a side job than a true "asset" generating money while you sleep. You’re still trading time for money.

Naval seeks truly passive income. He favors creating systems (e.g., a software company, automated business) that operate independently without his constant time investment.

3. Poor Scalability

This relates to point one:

• Real Estate: Managing 3 units might be easy, 10 becomes overwhelming, 100 demands a whole company. Scaling is "heavy"—requiring more time and effort as it grows.
• New Wealth Models: Software serving 100 users vs. 1 million may demand little extra effort. A viral video viewed by 10,000 or 100 million costs you the same. This scalability dwarfs real estate.

He argues we should choose paths offering "create once, scale infinitely" over "start from scratch every time you expand."

In Summary

For clarity, here’s a quick comparison:

Naval’s Conclusion:

Real estate can be part of asset allocation, like gold or index funds—perfectly valid. But if it’s your primary path to massive wealth, you’re likely choosing a harder, slower route today.

He encourages us—especially younger people—to focus on developing Specific Knowledge, then amplifying it with code or media. This creates a scalable, automated "wealth machine." That is the most efficient wealth-building game of our era.