When planning to invest, many people find themselves in a dilemma—real estate or stocks? While both are great ways to multiply your capital, I would say from personal experience that investing in real estate is far more rewarding than investing in the stock market. Here’s why:
You have more control over your profits
Investors in the stock market make money by buying when stock prices are low and selling when they are high. It’s almost impossible to do this consistently because it’s difficult to know everything about the company you bought stocks in and the industry it operates within. If the industry takes a hit, there is a high chance that the company does too, and as a result, stock prices will fall along with the value of your investment.
In real estate, however, you deal with individual properties that can be vastly different in size, location, features, and price. There is not a fixed market for the property you’re planning to buy or sell. For example, you can always negotiate and buy an old property at a low price then revamp or remodel before selling it for a substantial profit.
In other words, you have more control over your profits investing in real estate than you have when investing in stocks.
You can have a consistent cash flow
When you invest in stocks, sometimes you win, sometimes you lose. There is no guarantee you will make the same amount you made last month this month or the next as it all depends on company performance, interest rates, inflation, and many other relevant factors.
In contrast, real estate can provide a source of consistent cash flow. If you have a property, you can rent it out and receive monthly payments from your tenants. Along with that, the market prices for rental properties keep pace with inflation so you will receive higher rental income should the cost the living increase.
Your investments should be giving you a steady income that you can save or use to reinvest. Real estate investment provides you with precisely that.
You can enjoy unique tax advantages
A depreciation expense is one of the most beneficial tax advantages real estate investors enjoy. It legally allows for a tax reduction that benefits investors by giving them extra money they can use to save, reinvest, pay back loans, or spend on anything they want.
While real estate is a good investment, you cannot go out and buy just any property. It’s important to put in the time and effort to find deals and perform thorough due diligence. It’s common for sellers to overestimate the price of their properties without taking into account the state of the property, so doing detailed research on the property as well as its developers is essential during the negotiation process. As an investor, it’s crucial to buy below the market value to make the most out of your investment. Whether you purchase a small commercial space or a luxurious penthouse, be smart and strategic!