Updated almost 2 years ago on . Most recent reply
A Real Estate Analogy
A Real Real Estate Analogy
I am starting my real estate adventure and I am trying to draw a comparison from paper assets (stocks, bonds, notes, T-bills, crypto, etc.) with real estate.
For those who know a bit more than me (and i know this will vary by person) but what are corresponding "tech stocks" (AMZN, AAPL, NVDA, FB, GOOG, etc.) of real estate? Are there any other types of real estate that might represent value sector, energy, healthcare, etc.
The reason for the comparison is for me to try and understand the sectors and different types of real estate (SFH, townhomes, apartments, duplexes, quadplexes, commercial, storage, single tenant NNN, etc.) in hopefully launch into a real estate sector I would like to pursue, learn more about and purchase, etc.
Most Popular Reply
That question will require an essay to answer every part of your question :)
With stocks, you mostly gamble on appreciation. Keeping it short here. Dividends give you cash flow but usually very little.
With Real Estate, you make money 4 ways:
- Appreciation (forced vs natural). Forced is when you add value. Natural is your market appreciation.
- Tax Benefits: building deprecation, cost segregation, write offs etc..
- Principal debt paydown: tenant paying off your loan.
- Cash flow.
Once the above are all added up, your true Rate Return will by far exceed your returns with stocks.
Now regarding the different type of real estate, that depends on a lot of factors and mostly on your financial goals and where are you in life today. Each of these have pros and cons.