All Forum Posts by: Bea Kari

 They are almost identical from a historical standpoint so in reality you will not convince them on that merit only. You can convince them on diversifying the portfolio but trying to compare real estate to S&P you will see returns are about the same and the S&P requires a lot less work than real estate. where people make money in real estate is by finding a good deal and having it cash in, just like finding an underappreciated stock. 

Hi Bea, welcome to the community and great first post! You’re asking the classic “real estate vs. stocks” question — and the math really depends on how you look at it.

With real estate, you’re not just comparing rental cash flow to S&P 500 returns — you also get leverage (your $80k controls a $400k asset), loan paydown, appreciation, and tax advantages (like depreciation write-offs). Over time, those layers often make real estate outperform stocks in total wealth-building, even if the stock market looks stronger on the surface.

For example, if your property appreciates just 3% a year, that’s $12k in equity growth — on top of rental income and loan paydown. Compare that to a 7–8% return on $80k in the S&P, and the leverage effect starts to show the difference.

If you want, I can show you a simple “real estate vs. S&P” calculator that breaks this down with your exact numbers. It really helps partners see the bigger picture.

@Bea Kari - in real estate investing, you make money five different ways; 1: cash flow, 2: Price appreciation, 3: equity paydown, 4: depreciation on taxes, 5: inflation.  In investing in the stock market, you only make money in two ways; 1: dividends, 2: price appreciation.

Leverage is really large.  If you are 20% down as you say, than you have 4:1 leverage and any gain in price appreciation increases by that same factor.  You essentially gain 5% for every 1% appreciation.  It does go the opposite way as well (1% loss in appreciation is a 5% loss in your equity).

Personally, I am not buying to hold real estate in this market (because prices and interest rates make it very hard to make any cash flow).  With that said, if you are willing to hold long enough, real estate historically outperforms stocks when you consider those five income sources.

As an example, I purchased a property for $35k in 2015 and put $35k to get it rentable.  I was in it $70k.  I than cash out refinanced and was given a  check from the bank for $110k (appraised at $150k).  I continue to cash flow on this house so what is my rate of return?  I was given $40k more than I have in it and was able to use that money to buy more real estate.  This is how I have over 20 properties because I was able to get most or all of my cash equity out of the property and redeploy it into the next property.

I'm doing the same thing flipping right now.

I'd be happy to speak more about this.  If you are interested, DM me.