Folsom, CA · Member since 2015 · 4 posts · 7 votes
Coming across this website and the Financial Independence subreddit, I've gotten an itch to increase my rental real estate portfolio to start generating residual income. My wife and I sat down together to look at our finances, and she thinks it's a bad idea.
Where we currently stand, we own a rental home and our primary residence outright, with no loan. Rental home is worth about 450k, generates about 2k/month in rental income. Primary residence is probably worth about 600k+.
Our stock/investment portfolio, including Roth IRAs and 401ks are worth about 600k. Of that, about 250k is in taxable accounts that we could withdraw if needed.
My wife's argument is by buying another rental property, we would be dipping into the 250k and we would be overweight in real estate vs. stocks if you don't count the 401ks and IRAs. She thinks it'd be more wise to have the 250k in our stock portfolio, so we're more diversified and also because it's more liquid.
How did your stocks contribute to the de-worsification of your portfolio today? I've dumped all my market-based investments for real estate and real estate lending for the following reasons:
1) Control - I'm in charge, not some crook on Wall St.
2) Stress - market volatility has no direct impact on me.
3) Leverage - can get more more on RE
4) tax advantages - where else can you depreciate an appreciating asset
The reason everyone thinks that is because many people who made money go and invest a good portion into real estate. Being an owner of a company is way more risky but even if only 10 out of 100 are successful (a failure rate of 90% by the way) and only 5 of those really really make it there are still 5 big winners in there. As such, even if just by luck a large portion of millionaires likely come from businesses (i.e. equity).
Here's the thing. I had a belief (a prejudice) along the lines of exactly what you said. So I went out to research how millionaires hold their assets. I know this is a real estate web site. But wealth isn't held in large amounts in real estate. Unless you call 12.3% a large amount.
Lots of people seem to disagree, so show me some numbers. I cited a book that did a large amount of research... here's another asset allocation table for assets held by accredited investors. Equities (33.9%), Cash and Equivalents (23.7%), Fixed Income (18%), Real Estate (12.3%), Alternate Investmetns (12.2%). Are all these sources wrong?
I am personally surprised the number isn't higher. It's one of those things that the book Millionaires Next Door brings out... that reality isn't always what you expect.
Chris, I don't know if those sources are wrong, but this is what I found:
Global Real estate value is $180 Trillion.
Global market cap of publicly traded companies is $75 Trillion.
Today's Stock market environment is similar to that 1937. After the 90% correction of DOW Jones in 1929 (index 381) to 1932 (index 41), massive QE was poured into the system and market rallied from index of 41 in 1932 to 194 in 1937 and the rates were raised prematurely in 1937.
Since the inception of the DOW jones, interestly the market shifts from a 18 year bull market to an 18 year bear market. 1982 - 2000 is an example of the 18 bull year market. Had you invested $250,000 and bought the S&P 500 in 1982 and closed you eyes for 18 years your S&P 500 portfolio would have been worth $3.2M by 2000. In 2000, the DOW peaked at 11,400 and eighteen years later, I would not be suprised one bit if the DOW is trading below 11,400 in 2018. We are currently in the last phase the of 18 year bear market that started in 2000.
I have believed that if oil drops to $40, something is very very wrong with the world, not just the economy. I do not believe Yellen will raise in the September, but do believe it will happen first quarter 2016. Only in 1941 is when the 10 year treasuries bottomed to 1.95. Most of never lived through an interest rising environment like we had from 1946 - 1980. The next two decades will be an interesting investing environment.
Don't listen to the "stock market is evil" rhetoric that gets spewed on this forum daily. The truth is you need to diversify. If you and your wife can't agree on what to do then split the difference in some fashion. Put some dough toward another property and some toward investing in the equities market. Simple.
The reason everyone thinks that is because many people who made money go and invest a good portion into real estate. Being an owner of a company is way more risky but even if only 10 out of 100 are successful (a failure rate of 90% by the way) and only 5 of those really really make it there are still 5 big winners in there. As such, even if just by luck a large portion of millionaires likely come from businesses (i.e. equity).
Here's the thing. I had a belief (a prejudice) along the lines of exactly what you said. So I went out to research how millionaires hold their assets. I know this is a real estate web site. But wealth isn't held in large amounts in real estate. Unless you call 12.3% a large amount.
Lots of people seem to disagree, so show me some numbers. I cited a book that did a large amount of research... here's another asset allocation table for assets held by accredited investors. Equities (33.9%), Cash and Equivalents (23.7%), Fixed Income (18%), Real Estate (12.3%), Alternate Investmetns (12.2%). Are all these sources wrong?
I am personally surprised the number isn't higher. It's one of those things that the book Millionaires Next Door brings out... that reality isn't always what you expect.
Chris, I don't know if those sources are wrong, but this is what I found:
Global Real estate value is $180 Trillion.
Global market cap of publicly traded companies is $75 Trillion.
$128 Trillion in oil and gas reserves. I'm confident this dwarfs the RE and equity holdings of the U.S. Government. Also, that the cost and time to extract the value is huge.
I guess my take away is that total real assets are likely worth more than equities. Who owns them? Ultimately, people.
Approximately 75% of millionaires made their fortunes via real estate. I'm not sure what the % for stock investors, but it's gotta be a small fraction of that.
This statement is complete fantacy. But this is BP, afterall, so we'll see if my post is removed;) Here is something to consider. There is this book, called the Millionaire Next Door. It sold a few copies. Maybe you heard of it.
Here are a few quotes, describing Millionaires (that is the first person in the following): "... three out of four of us who are self-employed consider ourselves to be entrepreneurs. Most of the others are self-employed professionals, such as doctors and accountants..." "...On average, we invest nearly 20 percent of our household realized income each year. Most of us invest at least 15 percent. Seventy-nine percent of us have at least one account with a brokerage company." "...We hold nearly 20 percent of our household's wealth in transaction securities such as publicly traded stocks and mutual funds. But we rarely sell our equity investments. We hold even more in our pension plans. On average, 21 percent of our household's wealth is in our private businesses."
The words "real estate" are absent.
Millionaires in general are "working wealthy" with good, consistent savings discipline and stable investments, primarily in equities.
Don't get me wrong. I am full-time REI. I also know and respect market cycles and believe we are seeing tops in both real estate and the stock market. I am of a contrarian mind set and am therefore selling rather than buying. Keep the powder dry as the saying goes...
That book is about getting the average American worker to save money and put a very small amount of their annual income, 10%, into an investment vehicle so they can retire when they're 65 and not have to live off SS. The books vehicle of choice is the stock market. It's not bad advice as the avg. America doesn't save squat, doesn't understand money, loans, credit card interest, and can't even balance a checkbook much less understand investments. So for that type of person the book is a revelation and they should buy an index fund that tracks the sp500. However, if you go look at the truly wealthy in this country you'll see an overwhelming majority have their wealth tied to real estate.
There's a famous Ray Kroc story I really like, he met with some grad students (I think it was an Ivy league school) and he asked them, "what business am I in?" Their response was, "hamburgers!". His response, "wrong, I'm in real estate."
The reason everyone thinks that is because many people who made money go and invest a good portion into real estate. Being an owner of a company is way more risky but even if only 10 out of 100 are successful (a failure rate of 90% by the way) and only 5 of those really really make it there are still 5 big winners in there. As such, even if just by luck a large portion of millionaires likely come from businesses (i.e. equity).
Here's the thing. I had a belief (a prejudice) along the lines of exactly what you said. So I went out to research how millionaires hold their assets. I know this is a real estate web site. But wealth isn't held in large amounts in real estate. Unless you call 12.3% a large amount.
Lots of people seem to disagree, so show me some numbers. I cited a book that did a large amount of research... here's another asset allocation table for assets held by accredited investors. Equities (33.9%), Cash and Equivalents (23.7%), Fixed Income (18%), Real Estate (12.3%), Alternate Investmetns (12.2%). Are all these sources wrong?
I am personally surprised the number isn't higher. It's one of those things that the book Millionaires Next Door brings out... that reality isn't always what you expect.
Chris, I don't know if those sources are wrong, but this is what I found:
Global Real estate value is $180 Trillion.
Global market cap of publicly traded companies is $75 Trillion.
How real is our debt? We owe ourselves. We don't operate ok the gold standard anymore. If we need money we print it. We could dissolve our "debt" tomorrow. I find so funny people think we owe China or anyone else money. They buy treasury bonds and get interest which we'll continue to pay as long as we have an economy and print our own money. I don't forsee that changing anytime soon.
I can buy a house appraised for 100k for 50k from a motivated seller.
A motivated seller in the stock market points clicks and liquidates 100k in a second for 100k. Every buyer that bought that equity just paid full price.
Off market real estate that has problems can be purchased with tons of equity.
Stocks are worth less than what it cost to buy. The difference between bid and ask is your instant negative equity.
Would you rather start the race winning or start from behind?
That is a great analysis. I like how you phrased, "you could have closed your eyes for 18 years" and made 3.2M. This shows the power of a great, truly passive investment over a bull run. You're spot on analysis also shows the effects of a bear market.
I am not a huge fan of the stock market, but use it for some long term goals. I gave up understanding it. A rumor, some coup d'état in a third world country, or an off-sentence by the federal reserve could lead to a 500 point drop in the DOW. There are always stupid reasons why the market is up or down on any particular day. I believe it is best used as a long term investment vehicle.
However, I will play a little devil's advocate here concerning RE and the stock market.
Contrary to popular belief, real estate investment, other than REIT's, some syndicates, and some TIC's, is not a passive endeavor. Even if you have a team, PM, and/or turnkey provider, that group of people has to be managed by the owner. What is the old saying about the storekeeper not minding the store? You must keep this in mind if you want to move forward. I can understand concerns about throwing all of the money into real estate. It is, after all, something new to OP and his wife.
A well-diversified stock portfolio can be a passive endeavor. One would only have to look at asset allocations every few years and rebalance as one gets closer to retirement or if you get to heavily invested in one area.
Let's not forget the immediate 100% return in the 401k. If you have company matching, then you should most definitely be contributing at least that amount to get your match. You could always do an in service rollover to other investments, such as a self-directed IRA/401k if you desire other investment choices than what is offered. Real estate could be one. The ROTH is an excellent way to delay taxation on gains.
Diversification experts usually preach the 3 legs on a stool approach. Meaning you should get your retirement income from at least 3 different sources, such as Social Security, stocks, and annuities (or some other type, such as RE or pensions). I don't particularly like annuities based on high transaction costs, but this philosophy of diversification has its merits.
Not counting the personal residence, the OP is "all in" the stock market. Using the entire 250K available, he would be 42% invested in real estate and 58% in the stock market. Maybe 42% is more than he desires. Maybe 15 to 20% is all that he can tolerate. In the end, it is best to have the wife on board. Support from the spouse in this business is needed and he can avoid that dreaded "I told you so!" Spend this time researching on what you want to do and make a case.
In the end, I would definitely recommend to the OP to do a little diversification into RE. It is a little more work than a mutual fund, but the cash on cash returns are so much better if you make all the right moves.
Absolute single NNN leases are 100% passive and you collect a check with direct ownership.
Doesn't mean it is without risk. Everything out there has risk. The point is if you understand the risk or align yourself with someone who does before taking action to do something.
Diversity into multiple platforms is an overused term.
I take for instance a few hundred k and throw at the stock market not knowing what I am doing. Stock I bought takes a permanent dive and I take a loss. Did diversity help me?? It sure didn't.
I understand real estate. I can diversify into different types of real estate going through various cycles. Real estate is not an only down or up market. There is value to be had and money to be made at any time in the markets. It all comes down to what your expertise is.
The people I am around the view on money is quite different. The larger amounts the strategies change on how to invest versus someone with total net worth of 100k.
Investing is like taxes. Every situation is different. I like real estate in that land is a commodity and in good locations there is only so much of it which drives values.
Diversity is good but you should know what your doing ---be it real estate, stocks, bonds, oil, gold etc. Lack of understanding is high risk, lack of experience is risky, lack of control is risky, no one watches your money better than you. I personally can not figure out the variables in the stock market but I was raised around real estate. I like tangible assets that can be seen, insured, and touched vs paper that can be worth $34 a share on Friday and 10 cents on Monday (ie. Wachovia 2008). It also seems harder for the real estate market to be manipulated using software and computers.
Holy COW, this blew up! I had no idea, but it's encouraging that this forum has such an active and diversified member base. It's awesome knowing you'll get some knowledgeable and non-snippy responses!
As many of you mentioned, there are going to be a variety of responses and there really isn't a "right" answer, but the key is finding what I'm comfortable with and what my wife will be on board with.
We talked about it some more this weekend, and she's worried if I achieve FI through RE, I'll become a lazy bum ;-) I argue there are so many things I would LIKE to do, but can't because I'm burnt out from the 8-5 corporate world and just want to relax and spend time with my family when I'm home. She said I'm not a very good self-motivator (which is true) and I'm really going to have to show her I can motivate myself to do the things I want to do when I'm FI.
Some of you asked, and yes I DO self manage my portfolio. I actually work for a pretty large brokerage firm, am 7 and 66 licensed. I've been working on my 9/10, and my wife said if I can motivate myself to finish the 9/10, she'll let me buy another property and see how that goes!
Thanks for all the responses, it'll definitely take some time to digest it all! I did have one question though: Some of you mentioned the pros of real estate investing is you're buying locally instead of competing with people worldwide (stock market). I definitely appreciate that side of real estate investing, and would be more comfortable buying something close by so I know the area more, and can inspect the property in person. Others of you have mentioned the returns of buying outside of your demographic area. My question is, how did you become comfortable buying outside of your area or out of state, and how do you make sure the property is a. a value and b. in good, proper condition?
Thanks again SOOO much for all of your responses, it's SUPER encouraging! I will definitely be reaching out to some of you individually to ask for advice in the future!
If you want to pull cash out of your stocks you need to pay taxes and sell the underlying asset, thus reducing your future returns.
While I am totally in agreement that, in my experience, real estate has proven to be much more profitable, controllable, and able to be leveraged more effectively, I do not completely agree that you must sell the asset to "pull cash out" of your stock investments.
Before I started investing in real estate, I was very active in the stock market. I studied fundamentals and technical analysis every day, spent hours and hours every week analyzing charts and indicators, and made regular position trades in stocks and options. My decision to shift gears over to real estate is because I trust myself to manage my investment more than I trust some group of people in a boardroom somewhere. The control I have in real estate makes the preference over stocks a no-brainer.
So, back to my reason for the disagreement. Akin to rental income in real estate, some have already mentioned dividends. I admit that I did not read all comments for lack of time so, my apologies if someone already mentioned this, but, besides dividends, I was pretty heavily into options as well. I would liken this to a lease with an option to buy real estate. "Writing covered calls" is when you own the stock and sell someone else the right to purchase it from you at a certain strike price. When the strike price is not reached in the allotted time, their option expires worthless and you keep the money they paid for the option. Done right, this can produce significant income from your asset without ever actually selling it. Granted, there is a high level of speculation involved which could cause you to have to sell if the strike price is reached. That lack of control along with the tangible/intangible asset argument is what ultimately led me to the superiority of real estate.
you'll find biggerpockets is biased to real estate and bogleheads is biased against real estate. Neither should surprise you.
Im not a big lover of the stock market. That said I'm a numbers guy and ran the analysis multiple times. In terms of total return I see them equally good for my retirement with stocks better if you hold them in tax advantaged accounts. However you need to have the fortitude not to sell when they are low. Real estate forces you not to panic due to slow selling time and is more consistent.
For me personally I max all tax advantaged space (401k, backdoor Roth IRA x2, megabackdoor Roth IRA, hsa).
The rest goes into real estate. I've ended up about 50/50 in my net worth thus far.
@Daniel Mohnkern I love covered calls. Talk about a great way to generate cash... IF the investor knows the company and that market segment inside and out.
@Arlen Chou, So do I. They were my bread and butter before I got into real estate. If you know what you're doing, there are a lot of ways to make money in stocks and options without owning or actually selling anything. It's a lot of fun when you become savvy at it.
Approximately 75% of millionaires made their fortunes via real estate. I'm not sure what the % for stock investors, but it's gotta be a small fraction of that.
Approximately 75% of millionaires made their fortunes via real estate. I'm not sure what the % for stock investors, but it's gotta be a small fraction of that.
Table 3 is a distribution of wealth by % of ownership among economic classes. While the top earners own a larger % of the overall securities market the American real estate market is larger than the stock market by about $3 trillion. If you look into the next 20% a larger portion of their wealth is in real estate, this is probably pretty true as I'd say most active investors here on BP fall into that range.
This is a small sample size but actually claims the wealthy have more of their wealth tied to the stock-market than real estate. I remain a bit skeptical of what the real numbers would be so will stick to my speculative claim that, outside of families tied directly to financial or industrial revolution magnates, more wealth is built through real estate in this country.
The reason everyone thinks that is because many people who made money go and invest a good portion into real estate. Being an owner of a company is way more risky but even if only 10 out of 100 are successful (a failure rate of 90% by the way) and only 5 of those really really make it there are still 5 big winners in there. As such, even if just by luck a large portion of millionaires likely come from businesses (i.e. equity).
Here's the thing. I had a belief (a prejudice) along the lines of exactly what you said. So I went out to research how millionaires hold their assets. I know this is a real estate web site. But wealth isn't held in large amounts in real estate. Unless you call 12.3% a large amount.
Lots of people seem to disagree, so show me some numbers. I cited a book that did a large amount of research... here's another asset allocation table for assets held by accredited investors. Equities (33.9%), Cash and Equivalents (23.7%), Fixed Income (18%), Real Estate (12.3%), Alternate Investmetns (12.2%). Are all these sources wrong?
I am personally surprised the number isn't higher. It's one of those things that the book Millionaires Next Door brings out... that reality isn't always what you expect.
Chris, I don't know if those sources are wrong, but this is what I found:
Global Real estate value is $180 Trillion.
Global market cap of publicly traded companies is $75 Trillion.
I had some time and wanted to verify your numbers... I'm not trying to be argumentative. I don't disagree that the global total available real estate market is large. Apparently $180T. But in the article you cite, "However, nearly three-quarters (72 per cent) of this is non-investable owner-occupier residential property, leaving about $US50 trillion ..." That's globaly.
The publicly traded US market cap is $20T +/-. Add in the US bond market which is roughly twice the size of US equities market cap(1), and the collective dollar size of the combined debt/equity market is about the size of the global investable $50T in real estate.
As a reality check, I looked at numbers I have at my disposal. Real estate in Wake county NC is 'worth' $135B based on assessed value(2). Wake county population (sept 2014) is roughly 1 million, and the US population is roughly 220M. So $135B * 220M = $29.7T. Obviously not all of the US is like Wake county, but $30T is a number that seems reasonable for the US total available real estate market.
The US Census estimates about 118M households and at $160K median per house, or $18.9T in residential households. That also seems reasonable for the context of this topic.
Note that if you take out people's personal residence, the real estate market available for REI drops considerably. The takeaway is that the investable US equities (equities) and US bond market (fixed income) is greater than the investable US real estate market.
(1) (2) from county records SELECT SUM( LandAssessed ) As Land, SUM( BldgAssessed ) As Buildings FROM `property` WHERE card=1 Land 43,240,101,726 Buildings 91,924,208,877 SELECT SUM( LandAssessed ) + SUM( BldgAssessed ) As TotalRE FROM `property` WHERE card=1 TotalRE 135,164,310,603
(2) SELECT SUM( LandAssessed ) As Land, SUM( BldgAssessed ) As Buildings FROM `property` WHERE `Owner` LIKE '%state of%' AND `Owner` LIKE '%carolina%' AND card=1 Land 1,844,008,448 Buildings 2,523,944,035
(3) Based on assessed value, direct State and US owned land in Wake county is about 6.8% of total, direct State and US owned buildings is about 2.9%. (*)The US government owns the falls lake project ($1B+) These numbers exclude agencies like VA, HUD, etc. SELECT SUM( LandAssessed ) As Land, SUM( BldgAssessed ) As Buildings FROM `property` WHERE `Owner` LIKE '%united states%' AND card=1 Land 1,100,464,602 Buildings 114,063,445
SELECT SUM( LandAssessed ), SUM( BldgAssessed ) FROM `property` WHERE ((`Owner` LIKE '%state of%' AND `Owner` LIKE '%carolina%') OR (`Owner` LIKE '%united states%')) AND card=1 SUM( LandAssessed ) 2,944,473,050 SUM( BldgAssessed ) 2,638,007,480
I agree that leverage is really the only real reason I would invest in real estate. I mean don't get me wrong, tax benefits are nice, but you would make far more money over the long run in an index fund with faaar less work, than you would in real estate, unless you are leveraged. Leverage is the main reason real estate is superior to stock investing.
Charles Ho reach out to me if you want to chat about stocks, bonds and real estate. It is literally my favorite thing to do and I'd be happy to share some experiences and learn a few things from you as well.
I have some differing opinions than most on here but there has been some really good information posted in this thread.
Stocks (us and international), preferred stocks, bonds (us and intl), rental property, hard money loans etc are all good options.
There have been several Warren Buffett references in these posts, but I don't think this one has been mentioned (forgive me if I missed it), but I read a phenomenal biography "The Snowball" during the recent stock market crash and the best advice I gained from it was to buy when there is "blood on the streets." I think equities investing is the best way to take advantage of huge market downturns.
During the downturn I was finishing up college with a few real estate deals going on and I had little cash, but invested as much as I could in the market (financials were the best at the time) and more than doubled the cash I invested in less than a year.
I was a finance major and during my finance/business class lectures I would talk about my investments when we would discuss news in the Wall Street Journal. My professors warned the class despite my short term gains to avoid short term trades, diversify risk, etc.
At that time I would actively trade high volatility stocks and also hold.
It seems that even though economists know the market cycles, many are afraid to strike when the timing is right.
That said, I primarily invest in real estate because I have an advantage: know market values, have marketing in place to find motivated sellers, and it is easy to determine returns based on rental income. When you buy below market value you immediately create wealth.
I can't wait for another huge bear market when I can take advantage of everyone selling off perfectly good companies because their 401k decreased by 30+%. That may not happen soon.
I believe the stock market is a casino to those who do not take advantage of market timing, granted it is still a risk because it could theoretically go down to zero, but we all know that is not going to happen since our retirement plans are predominately invested in equities.
Full disclosure, I still have my wife get her full match with her 403b at all times in mostly the S&P 500 because a 100% immediate return is great and it beats most mutual funds. If you do not want to fool with higher maintenance investment classes that is definitely the best way to go.
Dave Ramsey and several other financial gurus tell you to be debt free and invest in mutual funds which is fine for most Americans. I think here at BP the investors don't mind spending the extra time to educate themselves and realize that real estate is a huge opportunity because it is truly an asset classes that benefits those that know their market. Where else can you by an asset worth $100k for $75k because there are trouble tenants living there? Real estate investors are problem solvers. :)
I know if I want to buy stocks worth $100k right now it will cost me $100k. The huge benefit (besides leverage and tax incentives) is the ability to buy below today's market value because of less competition/market knowledge.
I have the vast majority of my wealth in the stock market, averaging 10% or so gains over the last 12 years. For my standard portfolio, I can borrow 65-70% of the value at approx. 3% interest rate -- which I invest in real estate (leveraged via conventional mortgages). For my self-directed 401k, I can borrow 50% of the value for various real estate ventures, and make real estate or other high-rate reasonably well secured loans with the principle (deploying 150% of the value effectively).
I've been averaging 20%+ cash-on-cash returns on real estate (minus 3% or so borrowing cost), and 10%+ in the stock market. Given the stock market gains, low borrowing rates, and then real estate returns, it's a great way to leverage while diversifying across the two investment vehicles. I'm looking at 30+% compounding returns over the lat few years.
It all depends on your situation. I'm sure many of the answers here will be biased (to real estate, of course). Though, you have to factor in management and time. With the stock market, it can be volatile. However, if you study the different theories you'll learn there are ways to safeguard yourself from those shifts. One of them includes putting a portion of your funds in cash and gold. Whatever route you choose, make sure you choose carefully and do what's best for you and your family. Hope this helps!
You just basically walked into a Falcons lounge with a "NO" Saints Jersey on, and you may find that you won't get much stock love here. By all means, I consider myself an "Investor" which means I invest into anything I consider passive, RE, Stocks, Auto Pilot Websites, etc etc. I believe RE and Stocks function like brother and sister, they fight sometimes, but they are extremely powerful together, granted you know allot about both of them. When the market crashed in 2008, the most logical approach would be to take defensive positions and set your Stop Markets, example, 1 company that laughed at the crisis was "Dollar tree" and it doesn't take rocket science to know why. As Joel Owens said, his friends take the long term approach, when I invest in the market, I invest with the intent that these companies will be around for the next hundred years, and I conduct research based off of decade averages as Warren Buffet does, does that mean you will get the same performance, no it doesn't, but it does tell me the company has strong stability and growth. RE investors, often class their investments from A, B, or C class properties, the same goes with stocks, you get what you pay for, and stability and predictability in the market cost allot of money, which is why it is easier for individuals with less capital to invest in RE. My 2 cents, is to stay active in both, they are both powerful, if you "REALLY" know what you are doing. You can be aggressive when you know what you are doing, and you understand what you are risking. Diversification is protection against ignorance, it makes little sense if you know what you are doing, - Warren Buffet. Good Luck Charles.
