Real Estate vs Other Investments

Real Estate Agent · Mansfield, OH · Member since 2016 · 37 posts · 27 votes

Hi all!

So I've been talking with my wife about the benefits to real estate investing vs. other forms of investing (stocks, bonds, annuities, etc.). She leans very much towards those forms of investing because it is what her parents have done and so it's what she knows. I've been trying to explain to her why I feel real estate has more benefits than the stock market and I was wondering if any of you could help me out.

Why do you pick real estate over other forms of investing? How can I better explain why real estate is a better vehicle for building wealth over stocks, bonds, annuities, etc.

Thanks for the help!

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Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

Leverage, tax benefits, and most importantly to me, control. What say do you have in the performance of a mutual fund or stock? Will banks lend you 20:1 to buy them? Why not?

If her parents are multi-miillionaires, I'd heed their advice. If their house is their largest asset? Probably not so much.

90% of annuities are horrible BTW. A variable one might be ok in certain situations but overall the returns are horrible and they are riddled with fees. Cheers!

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Jack B.
Rental Property Investor · Seattle, WA · Member since 2014 · 1k+ posts · 1k+ votes
8y
Originally posted by @Jesse Houser:

@Jack B. You're correct, being a landlord does have considerably more responsibility to it than just dumping money into a 401k and letting it grow. However, there are many other ways to get involved in real estate that don't necessarily require you to be a landlord (syndication/crowdfunding, notes, having a property management company handle the care of the property). There is still work involved with each of these, mostly keeping an eye on your investment or the company managing it. But I would argue that the same care should be taken with investments that don't include real estate.
You missed the point, let me help you out a little more: depreciation and business expenses that come with being a landlord are a business as much as an investment. You get these with other businesses as well. It isn't magically exclusive to being a real estate investor. It's exclusive to businesses. You get the same benefits if you own an operate a barber shop, retail store and restaurant...To compare them to stocks and bonds is like comparing apples to pigs. Think critically....
It doesn't matter if you do syndication, note investing or out right landlord/rent out real estate directly, all of these are businesses, so you can't compare them to merely owning stocks and bonds....You might as well say holding cash doesn't have the same tax benefits of owning real estate. And a PM has nothing to do with my point at all, that's about passivity, not tax benefits....If you want to insert a PM, having a PM is like having a general manager of a business you own. Regardless, it has nothing to do with my point AT ALL.
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Nick Button
Investor · Des Moines, IA · Member since 2017 · 17 posts · 3 votes
8y
HI @Jesse Houser, It really comes down to what you goals are and how you think you can get there. I consider REI to be the get rich for sure method or retire prepared for sure model. The most attractive thing about REI to me is control. If I need to get in there and manage a problem I can and I don't need too many special skills to do so. I decide what needs to done to make the property sing money. Leverage. I don't need to be all cash to purchase and control property. And finally my favorite thing is....My property will never go to zero in value. I invest for fun (I enjoy making money) and to retire prepared FOR SURE. Hope I have helped. Let me know if you want to discuss some of these points or any others in detail
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Jesse Houser
OP
Real Estate Agent · Mansfield, OH · Member since 2016 · 37 posts · 27 votes
8y
@Jack B. Thanks for the response but you seem to have missed my point, so let me help you out a little more. There’s no doubt that the two are different. The purpose of the post was for people to share why they prefer real estate over investing in the market and why they choose to build their wealth that way. You may disagree and it’s fine for you to have your opinion, but it seems like the majority here feel it’s an appropriate comparison to make when trying to decide on what works best for each person. And that includes comparing the benefits and downfalls of each as mentioned above by many other contributors. While I agree with you that syndication, note investing, and being a landlord are all forms of owning a business, I was trying to convey that there are ways to make that very passive (like having a property manager). No, not to the same degree of putting your money in the stock market or bonds or any other similar investment vehicle, but there are ways to make it more passive. Hiring a property manager may not have had anything to do with your point, but it did have relevance to the point I was making. Hence the reason I mentioned it.
The other avenue to consider is lending your own capital to another investor, whether that be in a syndication, private line/loan, or other types of lending. That is a much more passive approach to being involved in real estate. It’s similar to the stock market without the responsibilities that come with individually owning the property. And in this approach, you would have way more control over the terms, rates, etc., as you would work with the investor to determine what works for both of your needs.
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Paul B.
Rental Property Investor · Dallas, TX · Member since 2015 · 503 posts · 504 votes
8y
Originally posted by @Josh Coleman:

I'm not sure where the 2-3% average on real estate is coming from? Possibly, certain markets and types of real estate but that is not the average return (see below).
I think it's a measure of total home values nationwide.....basically, on average your home only increases about 2-3% a year. That's including the skyrocketing home values on the coasts, the stagnant home values in much of the mid-west, and the declining home values in the shrinking areas, all rolled into one average. It's meaningless for most people, because they only live in one market. And it's especially meaningless to real estate investors, because they should only be owning the properties that perform well at the lucrative end of the scale. No real estate investor aims to buy properties that only earn 2-3%. Many investors have a bad deal sometimes, so they might earn that low, but not intentionally.
Along the same lines, an index fund may return 8-10% over a long period of time (after fees), but the average investor earns less than that because they buy and sell at the wrong time.
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Paul B.
Rental Property Investor · Dallas, TX · Member since 2015 · 503 posts · 504 votes
8y
Originally posted by @Jesse Houser:

I'm liking all the conversation and points you guys are making about these investing options. I do have another question, though. The 10% return from the stock market has been thrown around a couple of times. While these numbers check out, I believe that percentage is before fees and other expenses are added in. So in reality, the return an investor is getting back is more like 6-7%. Am I wrong in my understanding?
Actually, I thought the statistics are usually after fees. But if you invest with a high-fee fund, instead of a plain index fund with low fees, you will probably end up with that lower result.
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Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
8y
Originally posted by @Account Closed:
@Dmitriy Fomichenko
I’m going through underwriting at US Bank. They asked me for my Solo 401K documents. This is to use funds to buy an apartment building. What documents are they looking for? It’s a revocable Trust (sole trustee is me), sole proprietorship.
Daniel, if you are trying to apply for a loan please remember that it must be non-recourse. US Bank do not offer such loans to my knowledge. Here is a list of lenders offering non-recourse financing to IRAs and 401Ks:
https://www.biggerpockets.com/blogs/2810/50272-lis...
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David Stewart
Real Estate Agent · Ocala, FL · Member since 2015 · 29 posts · 14 votes
8y
Originally posted by @Bryan Clement:

The biggest one is CASH FLOW! What other investment lets you buy it, cash flow enough so that you can pull 100% of your money out and repeat? Definitely not Stocks or Bonds. In fact, you cannot leverage stocks or bonds based on cash flow alone because the cash flow of those investments suck!
Stocks and bonds both produce cash flow for me. Dividends and bond interest rates are cash flow. And I can pull 100% of my initial investment out of an appreciating stock (I’ve done it with Apple, e.g.), and still have growing and cash flowing investments.
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Shiva Bhaskar
Investor · Los Angeles, CA · Member since 2017 · 523 posts · 476 votes
8y
Regarding RE vs. other investments, I think a lot of it is personal. I enjoy properties, looking into renovations, dealing with folks who might rent it etc. I have buddies who don't feel that way. They prefer buying stocks, index funds, cryptocurrency (I'm wary of that one), and so on. They think it's too much hassle, and if they feel that way yes, they shouldn't do it, because life is too short to do things you don't like.
The tax benefits (deprecation), the fact that your tenant pays off your mortgage and makes you extra $$ (depending on cap rates where you invest), the reality that there is so much potential to appreciate, all of these are huge positives for RE. Also, I like that you have some degree of control over the trajectory of the investment. I mean, you can add value to build equity (BRRR strategy etc), you get to choose tenants (obviously both depend on market, but it is not entirely up to someone else).
I do see your wife's point though. I don't think it's all or nothing. You can do real estate and put some of the money into the things she mentioned, which are lower management and lower risk. If anything, real estate will give you more money to put into those assets as well.
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Bryan Clement
Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes
8y
Originally posted by @David Stewart:

Originally posted by @Bryan Clement:
The biggest one is CASH FLOW! What other investment lets you buy it, cash flow enough so that you can pull 100% of your money out and repeat? Definitely not Stocks or Bonds. In fact, you cannot leverage stocks or bonds based on cash flow alone because the cash flow of those investments suck!
Stocks and bonds both produce cash flow for me. Dividends and bond interest rates are cash flow. And I can pull 100% of my initial investment out of an appreciating stock (I’ve done it with Apple, e.g.), and still have growing and cash flowing investments.
So Apple gives you $1.46 per share per year and the share price is $208.87. At that rate it would take you 143 years to make you your money back in full. You can buy my house at $99,000 and make $700 per month if the house is free and clear. At that rate, it would take you only 11 and 3/4 years to make your money back. The cash flow is much better in real estate.
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David Stewart
Real Estate Agent · Ocala, FL · Member since 2015 · 29 posts · 14 votes
8y
Originally posted by @Bryan Clement:
Originally posted by @David Stewart:

Originally posted by @Bryan Clement:
The biggest one is CASH FLOW! What other investment lets you buy it, cash flow enough so that you can pull 100% of your money out and repeat? Definitely not Stocks or Bonds. In fact, you cannot leverage stocks or bonds based on cash flow alone because the cash flow of those investments suck!
Stocks and bonds both produce cash flow for me. Dividends and bond interest rates are cash flow. And I can pull 100% of my initial investment out of an appreciating stock (I’ve done it with Apple, e.g.), and still have growing and cash flowing investments.
So Apple gives you $1.46 per share per year and the share price is $208.87. At that rate it would take you 143 years to make you your money back in full. You can buy my house at $99,000 and make $700 per month if the house is free and clear. At that rate, it would take you only 11 and 3/4 years to make your money back. The cash flow is much better in real estate.
I made my money back in full years ago. Most of my ownership in Apple stock is what I gained after I sold back enough shares (the stock has split twice since I bought it, and has gone up about 20,000% since my initial purchase) to equal the dollar amount I invested in the first place. (Results not typical. Past results do not guarantee future performance.) I actually make the amount of my initial investment back in dividends in less than two years, but I made the original investment back long ago.
I didn't say cash flow was better in stocks and bonds than in real estate. I said they cash flow. How well they do, and how quickly you can make back your original investment, depends on the specific security. Capital return on stocks is historically higher than on real estate. I don't know about cash flow. But you have to wait until your home is free and clear to get cash flow like $700 a month. I don't think that most investors in rentals pay cash for their homes so that all of most of their revenue is cash flow.
1 Reply
Bryan Clement
Rental Property Investor · Union, ME · Member since 2018 · 161 posts · 104 votes
8y
Stocks can be a great investment, but they gain money mainly based off of market appreciation and not cash flow, as real estate has. It's just dependent on how involved you want to be with your investment and how much control you want to give up. Both can be good, but real estate does tend to earn more than stocks. Very few billionaires are made from stocks without having complete control of their companies at the same time.
Originally posted by @David Stewart:

Originally posted by @Bryan Clement:

Originally posted by @David Stewart:
Originally posted by @Bryan Clement:

The biggest one is CASH FLOW! What other investment lets you buy it, cash flow enough so that you can pull 100% of your money out and repeat? Definitely not Stocks or Bonds. In fact, you cannot leverage stocks or bonds based on cash flow alone because the cash flow of those investments suck!
Stocks and bonds both produce cash flow for me. Dividends and bond interest rates are cash flow. And I can pull 100% of my initial investment out of an appreciating stock (I’ve done it with Apple, e.g.), and still have growing and cash flowing investments.
So Apple gives you $1.46 per share per year and the share price is $208.87. At that rate it would take you 143 years to make you your money back in full. You can buy my house at $99,000 and make $700 per month if the house is free and clear. At that rate, it would take you only 11 and 3/4 years to make your money back. The cash flow is much better in real estate.
I made my money back in full years ago. Most of my ownership in Apple stock is what I gained after I sold back enough shares (the stock has split twice since I bought it, and has gone up about 20,000% since my initial purchase) to equal the dollar amount I invested in the first place. (Results not typical. Past results do not guarantee future performance.) I actually make the amount of my initial investment back in dividends in less than two years, but I made the original investment back long ago.
I didn't say cash flow was better in stocks and bonds than in real estate. I said they cash flow. How well they do, and how quickly you can make back your original investment, depends on the specific security. Capital return on stocks is historically higher than on real estate. I don't know about cash flow. But you have to wait until your home is free and clear to get cash flow like $700 a month. I don't think that most investors in rentals pay cash for their homes so that all of most of their revenue is cash flow.
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Rhonda Wilson
Rental Property Investor · Tacoma, WA · Member since 2018 · 113 posts · 149 votes
8y
People who invest in the stock market are a bit like people who visit the casino. They'll tell you about a gamble they made that paid off many times over. What they won't tell you is all of the money they lost on other bets. I've bought plenty of stocks in my life and some have been great. Some have not been great. In then end, most people are better off putting their money in an index fund and getting the average return.
Investing in the stock market, especially through a 401k with a company match is smart. However, it does not have the advantages of real estate. Consider leverage. If you put $20k down and borrow $80k on a $100k property, a 10% increase in the asset's value is $10k. That is a 50% ROI. If that same money gained 10% in the stock market, your ROI would be 10%. If it's a rental property, the tenants are paying the mortgage, so even without strong capital appreciation, your tenants are slowly but surely paying down your debt and building equity for you. It doesn't seem like a lot at first, but over time, it's magical. What's more, any income you receive is highly tax advantaged due to depreciation.
To give an example, we have a property this year that will cash flow about $40k. On that we will get a $24k depreciation deduction. Thus, we are only paying tax on $16k of the cash flow. It's not that good on all of our properties, but I wouldn't say this is unusual for a highly leveraged property. Suppose a tax rate of 25% and instead of an after tax net of $30k for W-2 or stock income, we get a net of $36k. Honestly it feels like cheating but the law is the law. You are required to take depreciation.
All that being said, this business is very hard work and the risks are very real. It helps to have a lot of patience and to be prepared for the worst because we all have setbacks.
1 Reply
Jacob Hill
Rental Property Investor · Orlando Florida · Member since 2018 · 11 posts · 4 votes
8y
Just Diversify
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James Ma
Burnaby, BC · Member since 2017 · 283 posts · 268 votes
8y
Hi Jesse,
As others have said, it's great to have a mix of equities and real estate to balance out your investment portfolio and diversify risk.
Real estate returns tend to be better due to leverage. Being able to put in 20% downpayment and the bank covering the other 80%. While you can trade on margin in stocks and still use the bank's money for the investment, the interest rates are typically higher from what I've seen and there is the ability for the bank to call in the margin when you owe. I also don't believe they typically offer 4x the amount you put in whereas real estate allows the 20% downpayment.
Real estate also is a safer bet. Land and area value are a lot less likely to change drastically in value compared to a business. Think how Blackberry used to dominate the phone market and seemed like a great bet and now are a thing of the past in the smart phone world.

Can someone make more money from stocks than real estate? Definitely possible, but limited to very few people who day trade for a living successfully or making the right stock pick like putting a bunch of money into Amazon before it boomed.
Running the numbers on my REI, I'd expect around an average of 50%+/year ROI over the next 5 years assuming 4.4% appreciation per year which is a historical average. That is impossible to have that kind of return consistently in the stock market.
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Terrell Garren
Rental Property Investor · Concord, NC · Member since 2016 · 1k+ posts · 3k+ votes
8y
1) Diversification is smart
2) People smarter than me can compare historical returns of equities vs RE. I'm also no good at picking individual stocks. I do know how to buy an $100K property, add $15K of sweat equity and have a $150K property,
0 Reply
Lance Robinson
Investor · Scottsdale, AZ · Member since 2015 · 130 posts · 102 votes
8y
Originally posted by @Account Closed:

Originally posted by @Jesse Houser:
Hi all!
So I've been talking with my wife about the benefits to real estate investing vs. other forms of investing (stocks, bonds, annuities, etc.). She leans very much towards those forms of investing because it is what her parents have done and so it's what she knows. I've been trying to explain to her why I feel real estate has more benefits than the stock market and I was wondering if any of you could help me out.
Why do you pick real estate over other forms of investing? How can I better explain why real estate is a better vehicle for building wealth over stocks, bonds, annuities, etc.
Thanks for the help!
We all know that the Stock Market never goes down . . .
OOPS! WRONG SLIDE, Sorry here it is . . .
OOOPS, THAT"S NOT IT EITHER . . .
What, me Worry?
Sorry folks, having a bit of trouble here. Nothing to see, move along.
In all fairness, houses look similar to this in general I bet if we compared side by side. Sure if you sell during the town times (RE or stocks) than you are in a bind. With stocks, you don't have to sell, with houses you may get foreclosed on though if you have debt on them. Alternatively, the market is the highest it's ever been today. So I see you trying to prove a point about the market going down, but looking at the trajectory it is currently way up. It will continue to swing as rental homes do.
Just want to make sure everybody sees both sides of this equation.
0 Reply
Account Closed
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
8y
Originally posted by @Lance Robinson:

Originally posted by @Account Closed:
Originally posted by @Jesse Houser:

Hi all!
So I've been talking with my wife about the benefits to real estate investing vs. other forms of investing (stocks, bonds, annuities, etc.). She leans very much towards those forms of investing because it is what her parents have done and so it's what she knows. I've been trying to explain to her why I feel real estate has more benefits than the stock market and I was wondering if any of you could help me out.
Why do you pick real estate over other forms of investing? How can I better explain why real estate is a better vehicle for building wealth over stocks, bonds, annuities, etc.
Thanks for the help!
We all know that the Stock Market never goes down . . .
OOPS! WRONG SLIDE, Sorry here it is . . .
OOOPS, THAT"S NOT IT EITHER . . .
What, me Worry?
Sorry folks, having a bit of trouble here. Nothing to see, move along.
In all fairness, houses look similar to this in general I bet if we compared side by side. Sure if you sell during the town times (RE or stocks) than you are in a bind. With stocks, you don't have to sell, with houses you may get foreclosed on though if you have debt on them. Alternatively, the market is the highest it's ever been today. So I see you trying to prove a point about the market going down, but looking at the trajectory it is currently way up. It will continue to swing as rental homes do.
Just want to make sure everybody sees both sides of this equation.
Your Comment: "Alternatively, the market is the highest it's ever been today." Great argument. Lol (Here we go again. "It can't happen here". "It will be different this time". "FOMO - Fear of Missing Out". ) Have a happy weekend. ;-)
"Don't Miss The Signs Of Another Slow-Motion Meltdown" by Tyler Durden
Fri, 09/21/2018 - 14:56
That slowing down effect is important to bear in mind as we encounter the 20th anniversary of the Russia-LTCM financial crisis of September 1998 and the 10th anniversary of the Lehman-AIG financial crisis of September 2008
Of course, investors recall where they were and what they did during the absolute height of the panics — Sept. 28, 1998 and Sept. 15, 2008.
Most investors may not be aware that these peak panic moments had actually been playing out for over 15 months in both cases. Investors who closely observed the early signs of trouble had ample time to get out of the way of the panic itself.
In fact, most investors were oblivious to the early warnings. That 15-month build-up was a real slow-motion event, not an illusion.
But the panic returned in the spring with the failure of Bear Stearns in March 2008, followed by the collapse of Fannie Mae and Freddie Mac in June. The panic turned into a global liquidity crisis and reached an apex with the bankruptcy of Lehman Bros. on Sept. 15, 2008, and the subsequent insolvency of insurance giant AIG.
Wall Street was facing a sequential collapse of other banks, beginning with Morgan Stanley when the Fed and Congress stepped in with trillions of dollars of guarantees, swaps and bailout money.
Both of these panics — 1998 and 2008 — began over a year before they reached the level of an acute global liquidity crisis.
Turkey, Argentina and Indonesia, all major emerging-market economies, are in complete meltdown. India, Malaysia, Brazil and Mexico are in the midst of currency collapses. South Africa is in recession. China’s growth is slowing and its debt is unsustainable.
Are we in another slow-motion meltdown? Are markets telling us that another global liquidity crisis is on the way in 2019?
It’s impossible to know, yet the signs are not encouraging.

1 Reply
Lance Robinson
Investor · Scottsdale, AZ · Member since 2015 · 130 posts · 102 votes
8y
Originally posted by @Account Closed:

Originally posted by @Lance Robinson:
Originally posted by @Account Closed:

Originally posted by @Jesse Houser:
Hi all!
So I've been talking with my wife about the benefits to real estate investing vs. other forms of investing (stocks, bonds, annuities, etc.). She leans very much towards those forms of investing because it is what her parents have done and so it's what she knows. I've been trying to explain to her why I feel real estate has more benefits than the stock market and I was wondering if any of you could help me out.
Why do you pick real estate over other forms of investing? How can I better explain why real estate is a better vehicle for building wealth over stocks, bonds, annuities, etc.
Thanks for the help!
We all know that the Stock Market never goes down . . .
OOPS! WRONG SLIDE, Sorry here it is . . .
OOOPS, THAT"S NOT IT EITHER . . .
What, me Worry?
Sorry folks, having a bit of trouble here. Nothing to see, move along.
In all fairness, houses look similar to this in general I bet if we compared side by side. Sure if you sell during the town times (RE or stocks) than you are in a bind. With stocks, you don't have to sell, with houses you may get foreclosed on though if you have debt on them. Alternatively, the market is the highest it's ever been today. So I see you trying to prove a point about the market going down, but looking at the trajectory it is currently way up. It will continue to swing as rental homes do.
Just want to make sure everybody sees both sides of this equation.
Your Comment: "Alternatively, the market is the highest it's ever been today." Great argument. Lol (Here we go again. "It can't happen here". "It will be different this time". "FOMO - Fear of Missing Out". ) Have a happy weekend. ;-)
"Don't Miss The Signs Of Another Slow-Motion Meltdown"
by Tyler Durden
Fri, 09/21/2018 - 14:56
That slowing down effect is important to bear in mind as we encounter the 20th anniversary of the Russia-LTCM financial crisis of September 1998 and the 10th anniversary of the Lehman-AIG financial crisis of September 2008
Of course, investors recall where they were and what they did during the absolute height of the panics — Sept. 28, 1998 and Sept. 15, 2008.
Most investors may not be aware that these peak panic moments had actually been playing out for over 15 months in both cases. Investors who closely observed the early signs of trouble had ample time to get out of the way of the panic itself.
In fact, most investors were oblivious to the early warnings. That 15-month build-up was a real slow-motion event, not an illusion.
But the panic returned in the spring with the failure of Bear Stearns in March 2008, followed by the collapse of Fannie Mae and Freddie Mac in June. The panic turned into a global liquidity crisis and reached an apex with the bankruptcy of Lehman Bros. on Sept. 15, 2008, and the subsequent insolvency of insurance giant AIG.
Wall Street was facing a sequential collapse of other banks, beginning with Morgan Stanley when the Fed and Congress stepped in with trillions of dollars of guarantees, swaps and bailout money.
Both of these panics — 1998 and 2008 — began over a year before they reached the level of an acute global liquidity crisis.
Turkey, Argentina and Indonesia, all major emerging-market economies, are in complete meltdown. India, Malaysia, Brazil and Mexico are in the midst of currency collapses. South Africa is in recession. China’s growth is slowing and its debt is unsustainable.
Are we in another slow-motion meltdown? Are markets telling us that another global liquidity crisis is on the way in 2019?
It’s impossible to know, yet the signs are not encouraging.

Every time it has dropped it ends up going higher, much higher, per the charts you showed. So unless someone needs the money in the next 5 years, you probably want it to drop so you can buy more even cheaper. It's only a loss if you sell and realize it, like real estate.
By the way I have exactly $0 invested in the Stock Market. So I'm not arguing stock market over Real Estate, I'm just arguing this exact fear driven example.
Nothing more to add, I know you like to debate a lot on the forums : )
PS I'm in Scottsdale, right down the road from you!
1 Reply
Gilbert Dominguez
Investor · Detroit, MI · Member since 2016 · 211 posts · 144 votes
8y
Let me just give you an example of what I have actually done though investing in real estate.
30 months ago I purchased a 2 bedroom one bath for $12,000.00 two weeks ago I sold it for $203,000.00. One year ago I purchased a two bedroom one bath for $18,000.00 and added one bedroom and one bath that cost me $13,000.00 for an all in cost of $30K. Last week I sold it for $237,000.00. 3 year years ago I purchased a 5400 square foot duplex that I have neither rented nor improved for $15,000.00 all cost included. I got a recent appraisal on it for $179,000.00.
I have been investing in real estate for over 30 years now and I pretty much can do similar deals all year round year in and year out, and I do it all with my own cash , no finance so no interests to pay. How would that compare with what you can accomplished with standard stocks , bonds, and the like?
I think someone mentioned something about a savvy investor. When you are in control you can exercise your own intelligence independent of the market sentiment.
careerwise total losses =$1.1 Million
total gains = over $3 Million in cash plus $5M in assets after losing the $1.1 Million
When I first got started I started with about $8,000.00 in cash.
According to Jim Cramer $8,000.00 invested in the S&P 500 over a 30 year period might grow to just under $160,000.00.
I think I have done a little bit better through real estate investing, not much better but just a little. hehehehehe
0 Reply
Kevin PolitePro Member
Investor · Decatur Atlanta, GA · Member since 2011 · 612 posts · 232 votes
8y
If you look a retirement income you'll receive more income from a real estate portfolio than a stock portfolio in most cases. Financial Planners tell you can remove 4% a year FROM your stock portfolio to live off of while with real estate you're receive cash AND maintaining your principal . With dividends from stocks and bonds you won't get the income you would from the same amount of money from a real estate portfolio if you've been investing for retirement for say 20 or even 10 years. Even after you add in increased taxes after you've exhausted depreciation, but you could then 1031 Exchange and start all over again.
0 Reply
Lee S.
Northern, CA · Member since 2014 · 674 posts · 444 votes
8y
I vote both. I invest in individuals stocks and my wife has a 403b and we invest in RE also. I'm not really interested in waiting 20 years to retire though, I feel I can make it happen much faster with REI. I've put 100's if not 1000's of hours in educating myself in both the market and REI.
If both took equal effort and had identical returns I would choose the stock market, I find it more intellectually stimulating (when investing in single stocks) and I don’t have to deal with people, tire kickers can be exhausting!
You can't directly compare the two due to effort involved, but I feel I can control short term gains much easier in REI (buying under market, value add) vs trying to time the stock market consistently (good luck with that). Yes, occasionally you can buy a stock at the right time that skyrockets but good luck doing that year after year. I love the BRRRR strategy, the thought of "putting a down payment down" and waiting 10 years to make that back in cash flow doesn't interest me.
My wife and I are in a good position in that she works a 9-5 that makes more than enough to cover our nice life style. I do the investing full time and take every penny I make plus my wife’s extra income and put it right back into investments. I dont use cash flow for life style, it goes in the bank as reserves or into the next investment.
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Michael Kistner
Rental Property Investor · Lodi, CA · Member since 2018 · 206 posts · 115 votes
8y
@Jesse Houser
While I invest in both the stock market and Real Estate, the reasons I’d choose real estate over the stock market is control over the investment, tax benefits, and the leverage that can come from it.
With that said, if you’re looking for a safer more passive income the stock market would be your bet.
https://www.investopedia.com/ask/answers/052015/which-has-performed-better-historically-stock-market-or-real-estate.asp
Just diversify and it’s win-win for everyone! Good luck!
- Mike
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