Real Estate or Stocks: Which Is the Better Long Term Investment?
By David Brown for 4bn.co.uk
If you doubt that real estate is a good investment, just take a look inside the portfolios of the very rich. Nearly every wealthy dynasty in the world is grounded in property investments. More fortunes have been made in real property than in any other investment vehicle in history. Even those who made their original fortunes in other venues are quick to protect and preserve that wealth by investing in property.
There are many reasons why property is a better investment than stocks, bonds or mutual funds.
1. The supply is limited. A company needing additional revenue can issue and sell more stock, thereby watering down the value of individual shares. Conversely, no one can issue more land.
2. Real property is essential. People need homes in which to live. Businesses need factories to produce goods, and stores from which to sell. Farmers need land to grow crops and raise cattle. All of these require real estate.
3. You do not need to pay the entire purchase price up front. Property can be purchased with leverage, or borrowed money, and usually is. By law, the amount of leverage which can be used to buy stock is limited. With real property, there are no limits on the percentage of leverage you can use.
4. It is possible to find investment property bargains. If you want to purchase a stock, you must pay the established price for that day and time. When you decide to purchase property, it is possible to find those which are undervalued, or that you can negotiate the price you are willing to pay. This was never truer than in the current economy.
5. With property, your investment can pay for itself, and pay you too. If you purchase income producing real estate such as rental property, your tenants will be paying the mortgage for you. By carefully choosing your property, you can have positive cash flow, giving you ongoing income as well as paying all of the expenses.
6. Expenses on income-producing properties are tax deductible. You also will be able to claim a depreciation credit on the building itself.
7. You can actually control your property investment. With stocks, you are at the mercy of those who operate the company. Conversely, you can implement strategies to maximize your returns on your investment property portfolio. You can make improvements that can increase the value or increase the rents.
8. Both property and stock market values can be affected by the state of the economy. However, only real property is a tangible asset that cannot be dissolved or rendered worthless by a company declaring bankruptcy.
By carefully studying the real estate market and avoiding getting caught up in the “hype” of trendy areas, an investor can almost always guarantee that his properties will appreciate in value over the years.
For information on off market properties from $1,000,000 to $6,000,000 email Chuck@dealmakerteam.com