The 22 yr is just playing the wrong game. He needs to take out a fixed rate mortgage, as large as possible. Then rent the property.
When I was 22 all I had was about $5K in savings, less than a year of experience at my first full-time salaried position and student loan debt to pay off. I imagine any reasonable loan officer would deny me on the spot for a mortgage given my liabilities and lack of proven ability to make payments.
In the 60s when the wages were high and inflation high as well?
Very expectable, it was common place for people in their early 20 to be able to afford homes, and it was seen as very good that was the case
That said, a new house from the 60's is very different from a new house today.
The things that come to mind:
Much larger kitchen space.
Shared bathroom vs every bedroom has a bathroom plus half bath for guests.
Major code differences for electrical.
But it still feels wrong to say that this isn't a concern and to dismiss it with that argument, since people still need entry-level options, even if we tout the new bells and whistles we've added to the houses or vehicles over the past few decades.
Saying "housing prices are ridiculous" followed by, "but you get more features!" is no consolation to the family looking to get their foot in the door of the housing market.
High interest rates (especially above inflation) create an incentive to save money, and keep property prices low. The higher borrowing costs keep the bid prices of property down, and the positive real interest rate means people don't need to speculate on assets like real estate to save their money.
As an individual, one is most likely to outperform other non-commercial individuals. It's rather likely in a complex investment environment that money will flow upward from the less well informed and less well equipped investors towards the big players.
Which is why individuals should be extremely cautious where they invest .. lots of options can probably be summed up as: individual lends big player their money gets negligible real return, while big player makes orders of magnitude bigger return.
It's not necessarily high leverage, since you don't know anything about the person's balance sheet. It matters a lot more how much (and what type of) debt the person has, not so much how much debt the real-estate has. Their monthly debt payment to income ratio may be low for example, such that the mortgage isn't a problem at all (and it's an inexpensive way to borrow while inflation is high and mortgage rates are well below that rate of inflation, which is a historical oddity for the US).
Diversification-as-mantra is for people that don't know what they're doing and don't know where to focus. This is what morons on television preach, and other pop investment experts, because they too have no idea what they're doing, they just know that spewing out "diversify" won't get them fired and it seems safe (mediocre returns are anything but safe).
The typical person is incapable of being an expert at many asset categories. It is possible, over time, to become an expert at one or a few however, including real-estate. If you acquire competency at real-estate investing, it will pay off handsomely over time (as with equity investing). Unless you're born wealthy or acquire a lot of money in some other way, you're going to start off buying one property. Certainly one can reasonably debate the amount of down-payment to start with on that first property, depending on personal finances.
The most prudent investment path is to focus on an area narrowly, concentrate at becoming good at a thing, develop as much skill at something as possible. That competency is your safety, not diversification (which is primarily useful when you have little to no skill and need to spread your investments around widely because you don't know what to focus on to generate superior returns for yourself; this is why someone like Warren Buffett advises the average person to just buy a low cost index fund, it's because they're incompetent investors ill suited to managing anything on their own - they simply do not have the skill to do so - and the index fund provides relatively safe generic diversification in the stock market, and the matching returns for that as well).
The OP was 2 short sentences. "As large as possible" implies a high leverage to me.
only in non-recourse states, of which there are twelve. if you don't live in one of those, the downside is still capped, but it's the full purchase price of the house.
it's not a good idea to yolo invest like this unless you really know what you're doing.
Honestly, in most states your greater risk is likely that a renter just stops paying and you have limited or slow recourse options. But like most undiversified investments, it's possible everything could go to zero (see Detroit).
Mortgages rates are fixed for 2-5 years on average, with lifetime (25-35 year) fixes non-existent, if not so in the BTL sector.
Central bank rates are rising.
Buy to let as an investment is history. Landlords are leaving the game rather than joining it.
Some people do well with rental properties over the long haul, I wouldn't touch it with a ten foot pool these days - especially if you live in a state where tenants have more rights than the owners of the property.