Many people ask, why is real estate investing better than stocks? I have a huge disclaimer here, I help people with what I believe to be sound real estate investing advice so of course I come down on this side of the fence!
Financial advisors often advise their clients to invest their hard earned money in the stock market. This is the venue that they are most familiar with and have the ability to be paid through. As recent events have shown, putting your money in either the stock market or real estate is not a no risk proposition, but there are some ways to defer some the risks from investing.
There are many factors that can effect the price of stocks, some of which are in the news today:
Today the stock market is affected by the Tsunami and the nuclear plants that are in danger of melting down, last week it was because of a crazy dictator who was killing people randomly. With real estate, you tend to see a more normal progression up and down. There are no high-highs (minus the two years of craziness in 2004 and 2005) and no low-lows if you are investing with sound practices.
So, is real estate investment for everyone? Let’s take a look at real estate investing versus stock investing, plus other important factors that should be considered before investing.
One reason we like real estate so much is that it provides you with a tangible asset. For example, if you were an investor in a property and fell on hard times, you could live in the property or rent the property for extra income. With a financial downturn in the stock market, you have no tangible assets and may be forced to sell it at a significant loss.
If you are a seasoned real estate investor (or work with a seasoned investor), they know how to do the things that will help ensure a more successful financial investment. They know how to analyse the intital cost of the property, determine what repairs, upgrade and holding costs will be and finally go into it with an exit strategy that maximizes your investment. Additionally, you can help defray the risk even more by taking advantage of the ecomonies of scale with a real estate syndication group spreading the costs over a number of different investors.
One thing to note, many real estate experts predict that prices in the market are going to start rising over the next several years. Those looking for a steady return on their initial investment should consider getting in now while prices are low and inventory is high (it is the same old buy low, sell high model that just makes sense).
If you would like to find out more about real estate investing or how to use a syndicate to leverage your buying power, give us a call today! 720-306-8017