Business Management

Why I’d Choose to Invest in Real Estate Over Stocks Any Day of the Week

Expertise: Real Estate Investing Basics, Personal Development, Landlording & Rental Properties, Real Estate News & Commentary, Business Management, Flipping Houses, Real Estate Deal Analysis & Advice, Personal Finance, Real Estate Marketing
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Close-up Of A Businessperson Pointing On Stock Chart Over The Tablet Screen

Let's talk about investment strategies. Should you invest in stocks, or should you invest in real estate?

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Around five years ago, I was given a book that absolutely changed my world. I’ll tell you the name of the book if you comment on this post below. What it did was motivate me to start looking into how I could invest my money to produce residual income and increase my cash flow instead of just slaving away in a 9 to 5.

I initially started investing in an Australian healthcare company, because I believed that as Baby Boomers started aging and retiring, there would be a greater need for healthcare.

My first mistake was that I invested that money when I really couldn’t afford to spare it. So, it really wasn’t the right thing for me to do at that time. Additionally, at the time, I had an unfortunate car accident without insurance and had to sell off my stock portfolio to survive for six months while recuperating.

What I Learned From Investing Poorly

What I learned from my initial investing experience is that the stock market is very, very volatile. Sometimes there are big changes in a day. But most of the time, it varies month to month, or there could be a huge crash and it might fall to crap overnight. Even after my bad experience, I still believe you can make a lot of money in the stock market.

Related: Are You Still Picking Stocks? You Are Ridiculous. Here’s Why.

When you invest in stocks, you can do your due diligence online to get to know the company, but you are just one vote out of tens of thousands—if not millions—of other shareholders. So, you cannot choose what direction the company is going to take—what products they create, who they hire, and how much they're going into debt.

Fast-forward five years, and I’ve done over 500 real estate deals and am running a multi-million dollar real estate investment company.

Here’s Why I Think You Need to Invest in Real Estate

First and foremost, you are the CEO and board of directors of that property, venture, multifamily complex, or commercial building.

You get to choose:

  1. Where you buy
  2. How much you spend
  3. How much debt you get into
  4. What kind of renovations you are going to make
  5. Who the tenants are going to be
  6. Who your property manager is going to be
  7. Who your contractors are

You are entirely in control. You choose when to sell when to hold.

So, in my opinion, brick and mortar is a much safer and better investment. You get to touch it, you get to feel it, and you are in control of it!

What’s your preference—stocks, real estate, or a combination of the two? (Or something else entirely?)

Let me know with a comment!

Engelo Rumora, a.k.a."the Real Estate Dingo," quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate al...
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    Joel Galindo from Elko, Nevada
    Replied over 3 years ago
    Hello Engelo, I am a real estate investor who currently has 5 rental properties and I am in the process of buying my first multi family unit (fourplex), I also have a day job, I work in a gold mine, I never knew much about investing in stocks until know, I am currently studying to become a stocks trader, I took a 3 day stocks seminar that change my whole perspective about investing in stocks, in the seminar I learned about many investing strategies but what I liked the most where the cash flowing strategies which you buy a stock and rented it out for monthly cashflow (covered call) and you can get between 3% and 5% monthly return, another strategy that I really like is called an iron condor and in the one you can make up to 15% monthly return and what I like most about those strategies is that they are conservative strategies where you have a high propability of success of up to 93%, I know that I will take me time to learn how to do all those strategies but I will keep learning and studying until I master them and I will also continue to invest in real estate and hopefully I can become financially free in one year.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 3 years ago
    Awesome Joel and thanks for your comment. Seems like you are working very hard. I wish you much success with your endeavors.
    RAMON RODRIGUEZ
    Replied over 3 years ago
    You make so easy to understand why I should invest in real estate instead of stocks. This is about results; tangible results. When running properly, with real estate I own the source of the investment. No one can take it from me, and it’s limiteless. It is like paving your own path and enjoying the fruit of your labors.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 3 years ago
    Thanks Ramon, Much success
    CKip
    Replied over 3 years ago
    Engelo, Please do not forget about stocks that invest in real estate REITs – Real Estate Investment Trust. I would argue that it is easier for a new investor to buy a stock REIT that invests in a particular area of the real estate where a fund manager with experience in real estate is picking the real estate to buy and sell. By following the chart of such stock, say for instance ARR (up over 19% in the last year) go to yahoo finance, type in the symbol and watch the daily price. If it is going up week after week and paying a good dividend, (ARR is yielding over 9% and pays the dividend monthly, this is like having rent payments) you bypass all the problems with real estate. Also you have instant liquidity to your money as you can sell and be out by selling the REIT, rather than hoping for a buyer of your property. Just another way to skin the cat. Thanks ckip
    Engelo Rumora Specialist from Toledo, OH
    Replied over 3 years ago
    Thanks CKIP, I have no trust in REIT’s especially after seeing some of the S#$% they have been buying for years. That is just a disaster waiting to happen IMO. Have a great day
    Michael Herndon
    Replied over 2 years ago
    I agree, the stock market can be very risky. Thanks for sharing
    Jack Chambers
    Replied about 2 years ago
    great article.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks
    Joseph D Chapman Rental Property Investor from Greeley, CO
    Replied 11 months ago
    I was never interested in the stock market but have always been very interested in real estate getting ready to sell out house soon and buy a duplex or four Plex but I need to read more book and find some people that I can learn from so that’s what I’m working as of right now... So what was the book you read?
    Engelo Rumora Specialist from Toledo, OH
    Replied 11 months ago
    Thanks Joseph, I believe the book was Rich Dad, Poor Dad. My apologies as this is one of my older blogs. Much success
    Boryana Delov from Scottsdale, Arizona
    Replied 11 months ago
    What about diversifying? (sorry, if it’s been discussed earlier) I’m 100% in re as of now but have been looking into stocks lately. Do you recommend sticking with re instead?
    Engelo Rumora Specialist from Toledo, OH
    Replied 11 months ago
    Diversification is good but you don't need it if you know what you're doing and exactly where to invest. Much success
    Ionut Mihai Lapadat
    Replied 11 months ago
    Congrats on finding your path!I am on the same quest,finding real estate deals,partnering up,and always,always learning!So,what is the name of the book though? Cheers from Spain!
    Engelo Rumora Specialist from Toledo, OH
    Replied 11 months ago
    Thanks I believe the book was Rich Dad, Poor Dad. Thanks again :)
    Chris Brown
    Replied 11 months ago
    Definitely real estate. I will probably always have some money in stocks but primarily in real estate... At least that is the goal, as I am just getting started in the real estate endeavor.
    Engelo Rumora Specialist from Toledo, OH
    Replied 11 months ago
    I think it's a good time to invest in stocks when you see the stock market at high lows. Not like it is no (All time high's). Always have some cash ready to pounce. Much success
    JOHN MASCARO
    Replied 11 months ago
    Thanks Engelo. I've been investing in multifamily residential real estate for only 2 years and have already seen the amazing benefits of cash flow and residual income
    Engelo Rumora Specialist from Toledo, OH
    Replied 11 months ago
    Congrats and keep the dream alive :)
    Tushar P.
    Replied 11 months ago
    One stock I bought went 35x in 5 years. Even index funds have returned 4x in last 10 years. Can I buy a house for 250k that will be worth 1 million after 10 years, with zero effort? One important thing that is needed for stock investing is a solid stomach to handle the volatility - easier said than done, but guaranteed to provide better return than real estate, with zero effort.
    Engelo Rumora Specialist from Toledo, OH
    Replied 11 months ago
    I like index funds. The cashflow is much better in real estate and it's more in your control. Much success
    Brad Cowger
    Replied 11 months ago
    I agree. I have made a lot more money on my real estate investments and have less cassh invested.
    Engelo Rumora Specialist from Toledo, OH
    Replied 11 months ago
    Well done mate
    Speare Valasakos
    Replied 11 months ago
    Great post to help people get off the hump. I bought my 1st property in 1982 and never looked back. interested in the book you mentioned.
    Engelo Rumora Specialist from Toledo, OH
    Replied 11 months ago
    Awesome mate, Well done Rich Dad, Poor Dad. Much success
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 11 months ago
    Amen brother!
    Engelo Rumora Specialist from Toledo, OH
    Replied 11 months ago
    Grazie mille :)
    Greg Gallucci from Colonia, New Jersey
    Replied 11 months ago
    There needs to be some clarification here. You have a business which invests/purchases real estate. That is very different than investing in stocks. Unless you’ve ran a hedge fund. Which would be a business that invests in the equity market. The comparisons made here are grossly inaccurate. If you are truly passively investing then diversification is what you should strive for. If you are building a business then lack of diversification is common but also carries significantly more risk wether you are a 100% confident or not. For every billionaire business person there are thousands who have risked it all and lost. I would bet most of them were 100% confident as well.
    S. Jeff Cold from Charlotte, NC
    Replied 11 months ago
    We have invested in real estate on/off throughout my teaching career. At a time when colleagues were selling blood plasma to get by, we were learning to install VCTs at $.15 / sq. ft. At first we thought we couldn't do it and hired it out. The installer botched the whole job. We just had to read the manufacturer's instructions! (Start in the middle of the room, adjust for at least 4" widths at the wall) The worst RE deal I ever did, I still made $400. I don't even want to talk about the worst stock trade I ever made -- we'll just leave it at I lost money. I retired at 57 to have more fun. What book did you read?
    Andrew Hansen
    Replied 11 months ago
    Investing in real estate is awesome because you can make a leveraged investment more easily than you can with stocks. For example, if you buy a $100K property with 10% down and the property goes up by 10% you made a 100% profit on your investment. Any leveraged investments in the stock market are volatile and you really need to understand what you are doing. I agree with you on the aspect that you have greater control of the destiny of your investment with real estate, and never really considered that. I disagree with you about putting all your eggs in one basket as you talked about at the end of your video, we never know for sure which basket will grow the most so we should use multiple baskets, in my opinion. Please let me know the name of the book
    Jay Kaulitzke from Colorado Spgs, Colorado
    Replied 11 months ago
    Initially I started investing in Index funds because I didn't have enough money to invest in real estate. What I found though was that even if I was just passively investing, just buying and holding, I could still earn 10% a year or more on the S&P 500. Not far off from what some people make in their real estate deals. Then when I started getting more proactive, buying low and selling high, I started seeing even better returns. Right now I am making better returns in the stock market then most people do with real estate but real estate is still something I want to get into. With a good system and property manager I think it could be a good long term strategy to build a mostly passive cash flow.
    Jay Kaulitzke from Colorado Spgs, Colorado
    Replied 11 months ago
    Actually one thing I forgot to mention is that I want to learn to buy real estate with no money down. I know there are a few strategies on how to do that. You might not see as much cash flow on those kind of deals but if you don't put any of your own money into the deal then you are essentially making an infinite return.
    DT B. from San Diego, California
    Replied 11 months ago
    I am interested in REI, but there is much misinformation this video. RE investment is great, but the stock market is by far easier to manage and arguably more profitable (when not counting leverage). First, not having reserves and needing to be liquid at a bad time has nothing do do with your type of investments. This could happen with a bad tenant or turn in a market. Arguably, you would be better off in stocks due to trading volume and velocity being much higher. You are much more likely to get "market" price for your investment if you need to panic exit. You can also pull out portions of your investment as needed. How could you get back 10-100% of your investment RE down payment in 3 business days without massive costs? Stocks you can get market price and do it for ~$5. Second, there is a difference in trading (speculative flipping) and investing (buy and hold good assets). Timing and flipping investments requires luck, skills, and temperament that most people lack. In the age of low interest rates creating yield hungry money, much of this speculation seems sound. If interest rates change or banks get scared, all hell will break loose in stocks and real estate. Let's say you keep your day job... If you hold a hedged $500k portfolio of a broad market index paying 2% dividends and it crashes by 50%, how has your life materially changed? Other than your dividend now being reinvested at 4%, it hasn't. Contrast that with a 10 home portfolio of $500k. Not saying it isn't doable, but it is far more complex to manage. Third, do we really have control or is that an illusion? Interest rates, foreign investors, lending standards, taxes, local jobs, demographics, politics, pensions, etc... Much of this is out of our control once we buy a rent home. The prospects of a city can turn on a dime with a shift in politics, economic policy (trade, rents, etc...), or outlook on a resource. The same can happen to individual stocks inside of an index, but investors are shielded from most of this. Corporations exploit opportunity and add that value back into the index. Just keep putting your money in maintaining your hedge. Also, what about folks in high cost areas? Long distance REI is an example where even more trust/faith is required. Fourth, making all of our own decisions is sometimes overrated. If you bought just 5-20 stocks in different industries, do you actually know enough about each industry to lead the corporations? Nope. Just as RE teaches us to form good teams and trust them... Most people should be indexing and hedging said indexes. Let the industry professionals do what they do, i.e., preserve and grow shareholder value. Trusting the team isn't a bad thing. How many metro areas can we be experts in? Lastly, most funds have eliminated all but the smallest minimums ($10) and one can set up accounts as desired. Broad funds let investors toe in and test out full theories for as little as $25. For $100 you can set up a portfolio you want and sit back and watch it. For $500, you can build 5 different $100 portfolios and compare them. And yes, you can invest in RE via funds. RE is cool and I am here to learn about it, but all things being equal, the long term index investing in the stock market is a slam dunk for most busy people and a great way to raise seed capital while learning to build confidence.
    Steve Jones Real Estate Agent from Richmond, Virginia
    Replied 11 months ago
    100% invested in equities now. Looking for some passive income via Real Estate.
    Brad Shepherd Syndicator from Austin, TX
    Replied 11 months ago
    Stocks have had a good run so you've probably done well there. But the right real estate assets will weather a downturn better than those equities. But if you're truly looking for passive, don't think that single family rentals are a "set and forget" strategy. Even with a property manager.
    Engelo Rumora Specialist from Toledo, OH
    Replied 11 months ago
    You can't beat bricks and mortar mate. It's a safe bet IMO. As long as it cashflow's well. Much success
    Alex Limauro Rental Property Investor from Shelton, CT
    Replied 11 months ago
    What was the name of the book that motivated you?
    Jomael Ortizperez Investor from Oahu, HI
    Replied 11 months ago
    Hello, I have been investing in stocks, ROTH IRA, and ROTH 401k since April 2016. This year in July I invested in my first property and now I want more. My question to you is should I stop investing in my current online investments so I can save more cash and continue to buy real estate at a faster rate? Side note: I Max my IRA and 401k.
    Jesse Evans Real Estate Investor from Heiskell, Tennessee
    Replied 11 months ago
    I think it is better than stock market as long as you got management under control and buy correctly it is a great investment. I personally managed my own and it can be a challenge. But hey it suppose to be
    Clifton Al-Hakeem Bey
    Replied 8 months ago
    I definitely agree that investing in real estate is far more a better investment for long term wealth then the stock market. Unfortunately I haven't been able to get anywhere in investing in real estate EVERYONE that is a so called mogul of real want large amounts of money up front to help you to start a successful business of real estate unless you have good credit and purchase property which is what I want. My long term goal is at least 4 4-unit properties and grow from there. Unfortunately i haven't had ANY REAL HELP and finding properties in the Baltimore Maryland area. I WILL STILL CONTINUE TO MAKE THIS DREAM OF MINES A REALITY