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With the up tend in the stock market right now...does investing in real estate make sense? It seems that the stock market always rebounds faster than the real estate market does, should smart investing now dictate leveraging the stock market? Thoughts?
Different people have different investing goals at different times in their lives just as there are different markets and market products - to make a blanket statement that one type of investment is better than the other is an exercise in futility.
It all depends on your goals. Long-term investors buy real estate that cash flows and hold it until someone else pays off their mortgage. If a property pencils out and you are willing to hold it long term, you will make a good return on your investment. Short-term investors and flippers are gambling and the days of quick, easy money are over, so that's a higher risk for a lower return.
As for the stock market, someone is always making money. You can short it on the way down, buy and hold on the way up and trade options and channels either way. It takes time, luck and skill and if you don't have them, you could lose a lot of money very fast. You can make it very fast, too.
I think a good portfolio includes real estate and stocks, as well as other investment vehicles, but I believe in diversification. I like to ladder short- and long-term investments with residential real estate, commercial REITS and land. I'm not an eggs-in-one-basket kind of person. But a lot of people are.
If it based on performance and rate of return, stocks win.
I could not possibly dis-agree more.
Real Estate can be the absolute best investment.
Not always mind you, but it can be.
If you buy a single family dwelling for $100k, and your mortgage after 30 years will have require monthly payments to the total of $300k to finally pay it off. Then you must look at the market value at that time. Is the property worth more than $300k? or less.
On the other hand. If you buy a 5-unit apartment building for $100k, and only use rental income to make the mortgage payments, then you could buy into it for the closing costs. For me it has usually been around $3k to $5k. You will be building equity in the property each month. Without any cash coming from your pocket. After 10 years you can re-finance it and remove $100k cash. And you can repeat this about every 10 years.
So $5k in and you 'manage' the property. You can even live in it if you need to. I have. And every 10 years you can withdraw $100k.
There is no way you can do this on the stock market.
If it based on performance and rate of return, stocks win.[/url]
As an investor in both real estate and stocks, I couldnt agree with you more. I've lost 40% of my stock portfolio in a week, 10% in a day at times, and while properties have fallen, they havent fallen anywhere near this amount. In addition, since one can often invest in property using OPM, properties far outweigh stocks anyday. This doesnt mean that individuals should move everything from stocks to property, it means that every individual has different needs depending on age, capital available, risk tolerance etc..
As an investor in both real estate and stocks, I couldnt agree with you more. I've lost 40% of my stock portfolio in a week, 10% in a day at times, and while properties have fallen, they havent fallen anywhere near this amount. In addition, since one can often invest in property using OPM, properties far outweigh stocks anyday. This doesnt mean that individuals should move everything from stocks to property, it means that every individual has different needs depending on age, capital available, risk tolerance etc..
Quote:
Originally Posted by ernestmanning922
If it based on performance and rate of return, stocks win.
for the record, I meant that I couldnt disagree with you more, not agree..
Where can one buy a 5-unit apartment complex for only $100k?? That would be only $20k per unit; a pretty good deal if it can be had. Can it?
Okay, eliminate Detroit, Michigan, from the choices since you might have a hard time finding renters who will pay the monthly rent there.
I've bought a 5 unit building for $16K that appraised for $60K, yes, they can be had..
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The best investment is a basket of investments
