For the modern-day investor, having some real estate investments feels very good. The same, however, cannot be said for stocks. This is mainly, they lack a sense of tangibility, and the close one can get to seeing them is looking at price fluctuations as they happen in a chart. Real estate, on the other hand, is a solid investment where an investor can physically walk to the property they have acquired and assess the value that his or her money has brought.
Historically, the stock market has been known to be the home of consistent booms and busts, thereby producing higher returns. It was only one time that the real estate earnings rivaled that of the stock market in the USA, during the Great Moderation that happened between 1990 and 2006. However, this type of investment has had the worst losses in the history of finances. The increased volatility, incorrect research, and unprecedented news have been a great pain to the investor with some losing their whole investment in a single trade.
Some of the perks of real estate over the stock market include
The concept of control varies greatly depending on the type of investment one makes. For real estate investment, every acquisition is made by an individual from a CEOs capacity. That is, the investor gets to maintain control over his or her investment. It is always up to the investor to increase rent, market the properties and find better tenants, etc. however, investing into stocks means that one puts his or her entire faith into a company’s management whose interest and goals might not be aligned with that of the investor. Managers might commit fraud or drive the company to early deaths, leaving out the investor at huge losses.
Real estate has more tax perks than stock market investments. As of 2019, one can benefit from tax benefits of mortgage indebtedness of up to $750,000 on his or her primary home. Additionally, those looking to sell their property can earn tax-free profits if they have been living in the home for a period of about two to five years.
Easy analysis and quantification
Real estate investment does not require much knowledge for one to carry out a property valuation. The only calculation you need is rental income and realistic expenses. A real estate investment that can yield 6% + yield from a borrowed 3% will be gold. The exploitation of real estate can be easily done as long as one has the financial means to invest.
Leverage through others
Having the ability to leverage your investment is a very good thing. For example, an investment in real estate will only track inflation, in the long run, meaning that with an increase of 3% from an investment where you invested 20% can translate to cash on cash return of an easy 15%. Stocks, on the other hand, will generate earnings of about 9% each year when you include the dividends. However, it is important that leverage might end up putting you in a tight spot at the end, so there’s a need to be cautious about this.
Avoid all the stress and small earnings and start investing where the real deal is.