Real estatate vs stock market returns over the short to medium term

[Alex Silang]

What do you think? I'm trying to balance my allocations.

I was reading how the baby boomers retiring and selling over their portfolios is going to a have a massive effect on equities. Like a annual 2% drop over the long term. 

I was talking to a friend and she brought up that there's going to be a lot of volatility probably over the near term in the stock market. Meanwhile, a lot of the returns of real estate is fixed (Principal paydown, tax benefits, stable rent in many markets)

[Don Konipol]

Quote from @Alex Silang:

What do you think? I'm trying to balance my allocations.

I was reading how the baby boomers retiring and selling over their portfolios is going to a have a massive effect on equities. Like a annual 2% drop over the long term. 

I was talking to a friend and she brought up that there's going to be a lot of volatility probably over the near term in the stock market. Meanwhile, a lot of the returns of real estate is fixed (Principal paydown, tax benefits, stable rent in many markets)

If you’re speaking of PASSIVE investing, it doesn’t matter, it’s equally likely either one will provide better returns, or both may provide similar returns.  

It’s in ACTIVE investing where real estate wins.  It’s nearly impossible for anyone except for a full time professional, employed by a top tier investment firm, utilizing propriety information and technology  to add value or “alpha” in public equities market.  Over 20 years, the 1 year, 3 year, and 5 year “champions” crash and burn.

In real estate investing, it's very possible for an experienced, knowledgeable and "talented" investor to add significant ROI by "active" investing. AND, one doesn't have to have been at top of their MBA class at a top 5 business school to be in a position to be successful.

I recently did an analysis of how I accumulated my wealth in real estate (low 8 figures), starting with $5,000 equity and $34,000 loan in 1979.  Near as I can figure, 40% was just from cash flow, price appreciation, etc.  60% was from ACTIVE investing activities; creative financing (especially on the sell side to sell for higher price than all cash including selling with wrap around notes to earn the differential in interest rates), buying property with problems and fixing those problems; using CASH  offers and as little as 1 day closing to drive acceptance of below market offers; buying properties in one purchase and selling off one or more for significantly higher prices; buying vacant properties cheap and finding long term 3N tenants; buying notes at large discount to principal balance and “working” (restructuring) the note; etc.