The million-dollar question – what makes more money – investing in real estate or stocks? People who own real estate have produced astronomical returns for themselves and their investors but how does it compare to the average stock market return of 11.8% over the past ten years? Let’s talk about the pros of both real estate investments and stocks. Please stay tuned on the next blog to hear about the cons.
Real Estate Investing:
There are several pros associated with investing in real estates such as steady income, tax breaks and deductions, portfolio diversification, and plenty more!
Steady Income
Real estate has been known to produce steady income. The cash flow that real estate investing has only strengthened over time as you pay down your mortgage and shape up your equity. You are constantly receiving money and hopefully making a profit after paying all your expenses such as your mortgage every month.
Tax Breaks and Deductions
Owning real estate has a plethora of tax advantages, which is why many people invest in real estate. One of the most basic tax advantages is the ability to deduct expenses such as property insurance, property tax, and management fees associated with it. While these are great advantages, many investors invest with their LLC as it comes with even more benefits such as tax deductions on office space (in your home office), business equipment, and even traveling expenses.
Portfolio Diversification
In my opinion, having a diversified portfolio is a must. Constructing different kinds of assets, on average, will yield a higher long-term return. Another reason to have a diversified portfolio is the ability to hedge against market volatility and mitigate the risk if one kind of asset goes “south”.
Stock Investing:
Many investors enjoy investing in stocks as it is easy to buy shares of a company. With today’s technology, you can buy stocks online in a matter of minutes. Below are the pros of stock investing:
Lower Transaction Costs
Online trades have been lower than ever at a maximum price of ten dollars and there are apps, such as Robinhood and Vanguard, who do not even have transaction costs. Comparing it to real estate – they tend to have a fixed commission at roughly around 4-6%.
Less Work and Hours
There are so many people in the world who buy stocks for long-term growth and let them sit without even touching or looking at them. People who let their investments sit are able to focus their attention on other important things such as family time and personal growth.
Liquidity
With stocks, you are able to sell whenever you want. Whether you dislike a stock you purchased or want to cut your losses, you can easily sell your shares. With real estate, it is much more difficult to get immediate cash as it takes months to sell your interest or property.
At the end of the day, it is important that you compare the pros of both real estate and stock investing to determine which type of investment meets your investment strategy and/or criteria. Both options have their benefits and could play a critical role in your portfolio – as such, it is also important to weigh their cons.
Conclusion
At the end of the day, only you can determine whether real estate investing is right for you. As a starting point, think through your personal circumstances and the aforementioned considerations. Know that every investment strategy will be different, that each investment strategy has its own pros/cons, and that all investing carries a risk so as you continue to gauge whether you should invest in real estate, do your proper due diligence.
Investing in Real Estate comes with several advantages. Navigating the real estate investing process can be difficult, but you do not have to do it alone. We are here to help.
How You Can Get in On the Action
Cash Flow Champs is a privately held investment company that focuses on acquiring and managing opportunistic and value-add multifamily real estate properties. The company specializes in repositioning well-located assets in emerging markets surrounded by positive demand drivers such as population growth and job growth.
Cash Flow Champs partners with entrepreneurs and busy working professionals interested in investing in real estate but that lack the time to navigate the process. Alongside our partners, we aim to bridge purpose and profits in a manner that allows us to improve the lives of the residents in our communities and the neighborhoods where we operate.
In the words of Robert Kiyosaki, the poor and the middle-class work for money. The rich have money work for them. If you are an individual that wants to build and maintain generational wealth through real estate, all while making a positive impact on the lives of residents and the communities where you invest, we’d love to explore opportunities for synergies.
Schedule a brief call with us so we can get to know you better, understand your life goals, and to determine where synergies may exist.
This information presented on this site is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities in the company or any related or associated company and is not a recommendation to pursue a specific investment opportunity. Any such offer or solicitation will be made only by means of the company’s confidential Offering Memorandum and in accordance with the terms of all applicable securities laws and other laws.
