Real Estate vs. Stock Investments

Posted by Client Care on Wednesday, November 27th, 2013 at 3:03pm.

With the economy’s rebound in the last few years, many people once again are looking at the potential benefits of investing in rental properties and real estate.  This decision to invest in real estate over traditional stock options is something more and more people are considering as a way of accumulating wealth. Of course, the decision of which investment is right for you is a personal choice, but there are definite benefits that people who invest in real estate can experience. Big time property investors see this as an opportunity to build their wealth even further by providing housing for the 34% of Americans who occupy rental homes. With statistics like this it is clear to see why so many new investors are now rushing to acquire single family and multi family housing all over the country as well.

Here are some of the main benefits real estate investors will see in return on their investments when compared to traditional stock investments.

  • Real estate investments allow for a portion of the purchase to be financed which makes acquiring bigger assets easier.  You cannot do this in traditional stocks, bonds or CDs.
  • Low interest rates coupled with a small increase in value can result in a greater return than an unleveraged investment by about 12%. (According to Zelman & Associates)
  • Property owners can write off depreciation of an asset even though they are actually ascending which in turn provides yearly benefits to a long-term investment.
  • The biggest advantage of investing in real estate over stock is the cash flow they generate. You end up subsidizing the investment with the rental income it generates.
  • Tax benefits are usually the second biggest benefits for rental property investors who plan to hold on to the property for the life of the mortgage.  Where as returns on your investments from a more traditional kind of stock are taxed.
  • There are lots of real estate management companies available that make the business of owning rental properties easy, efficient, and predictably profitable.

If you have been thinking of investing in real estate as a means of building equity, it might just be time to talk to a professional today!

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