Not long ago there was quite a heated discussion in the comments following a blog post by Florence Foote on investing your money with Wall street vs into real estate.
While I agree with Florence that real estate is probably a better place to put your money in the long run, I take a different stance on why. I believe you can do extremely well with stocks if you put a lot of time and effort into researching the companies you invest in. But you have far less control over that investment. You have to rely on the people who run that company to make good decision. Sometimes they do and sometimes they don’t.
Real estate gives you the opportunity to buy assets at under market value, add value and make money in several different ways. It’s the ultimate vehicle for people who want to control their destiny and have plenty of options to make money. But it takes work. And just like you shouldn’t just buy a stock on a hot tip you also should not buy a house just because you heard the market is poised for massive growth. You also shouldn’t buy a house just because you can. There’s a lot more to home ownership and real estate investing than just being able to get a mortgage.
And that is where I think so many things fall apart for the average person.
I know so many people who will spend hours and hours researching the latest in t.v. technology before they spend $1,000 on a new flat screen. Then when it comes to the $100,000 in retirement funds they have or a $200,000 house mortgage they sit down for an hour with an advisor or mortgage broker that their uncle said was good and let someone else do the thinking for them.
Why is it that we spend SO much time making sure we’re getting the best value on our new television but we won’t put the effort into our own financial situation?
I don’t expect everyone to become a professional real estate investor or an expert stock investor.
But, I have a problem with the same people who choose not to educate themselves about their financial decisions then pointing fingers everyone on Wall Street because of the crimes of a few bad apples at Goldman or the entire mortgage industry for the sub prime crisis that happened.
Sorry folks – I know it isn’t fun – but you have to take a look at yourself when you face a financial loss. You have to take a good hard look at what role you played in all that happened to you because the reality is you ALWAYS have choices and no matter how badly scammed you feel you were there was probably a point where you could have (and SHOULD have) asked a few more questions and spotted the problem with the situation.
I’ve felt scammed and I have lost money. It hurts. And I spent several years blaming so many people for the problems I faced. But it wasn’t until I accepted the fact that it was my own choices that led me into that situation that I really could own my own destiny and change my future.
The majority of people in the world are good and honest folks. I truly believe that and everyone I meet is, in my books, honest until proven otherwise.
But I also take special care to test my assumption. I ask a lot of questions. I pay close attention to what is said and even closer attention to what isn’t said. You should do the same.
Ensure anyone that is touching your money truly has your best interests at heart and that they are an expert in what they claim to be an expert in. Ask for references. Check those references out. And then once they have your money keep an eye on what is happening. Don’t just walk away and not look back until you have to retire or problems arise.
There are real estate investors that have scammed people just like there are people on Wall Street that have pulled off some huge scams. There are systems in place to reduce the ability for the average scammer to screw with the average person, but in general, you still have to watch your own back.
And that is really all I want to say today! Watch your own back. Whether you are investing in stocks, mutual funds, gold coins, or investment property you have to do your own due diligence on the parties that are involved in the transaction. You need to ask a lot of questions and look under a lot of rocks to see what’s growing underneath them. That is your responsibility.
Real estate really isn’t any better than a stock if you’re just throwing your money into something and then not watching over it to make sure everything is going well.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.