Real Estate Investing
vs. The Stock Market
Real Estate Investing
vs. The Stock Market
Thinking About Buying an Investment Property?
Ask Yourself These Key Questions First
Investing in real estate can be a great way to build long-term wealth and diversify your financial holdings, but this type of investment is not right for everyone. Many investors prefer investing in the stock market, for the same, or higher, return as real estate. If you are thinking about buying your first investment property, you need to ask yourself some key questions before you go forward.
From whether or not you really want to be a landlord to your level of expertise in property investments to how much money you have to work with, there are some key things you need to look at to make sure you are making the right decision. Here are some of the most important questions you should consider before buying that first investment property.
Do I Want to Be a Landlord?
This is perhaps the most critical question you need to ask yourself. If you do not want to be a landlord, chances are you will not succeed as a real estate investor.
Many real estate investors avoid the day-to-day headaches of being a landlord by hiring a property management company, but keep in mind that will reduce your overall return. Even if you do hire a property management company, you will still be the owner of the property – and at least the nominal landlord.
Can I Handle Repairs and Maintenance on My Own?
Even if you hire a property management company to hire simple things like overflowing sinks and leaky toilets, you will need to perform needed repairs and maintenance from time to time. Being able to do the work yourself is a big bonus, since it will save you a substantial amount of time and trouble.
If you are an experienced carpenter, you can probably handle most repairs that come up. If not, the need to vet and hire contractors could drive up your expenses and ultimately eat into your profits.
Can I Afford to Buy in a Good Neighborhood?
Buying a run-down property in a sketchy neighborhood is a recipe for disaster. If you are afraid to drive to town to get the rent, chances are your experiment in being a landlord will not turn out well.
If you want to build long-term wealth in real estate and develop a steady and reliable stream of income, it is best to buy in good neighborhoods. Many of the most successful real estate investors made their fortunes buying in up-and-coming neighborhoods and riding the tide of property values.*
The problem is that properties in good neighborhoods tend to cost a lot more. You will need to look at your level of capitalization and determine how much you can afford to spend on in investment property. Taking out a mortgage reduces the amount of cash you need up front, but it also increases your risk and potentially lowers your return. You will need to weigh the pros and cons carefully and determine the best course forward.
What Kind of Returns Can I Expect?
In the end, you will be investing in real estate to achieve a reasonable rate of return, so it is important to weigh the various investment options you have available. Look carefully at the cash flow you can expect from the investment property you have in mind and compare it to what you could achieve in things like mutual funds, bank CDs and the like.
Real estate investing involves a level of risk even if you do everything right, and you need to be compensated justly for that extra risk. If you can make as much in a guaranteed bank CD as you could in the investment property, it may not be worth the extra risk. If you can make substantially more for your efforts, buying an investment property could be a smart move.
There is no doubt that investing in real estate can be a road to riches. Many fortunes have been made buying and selling real estate, and some of the most successful individuals got their start with investment properties. Even so, this investment path is not right for everyone, and it is important to ask yourself some tough questions before you call a realtor and start looking at rental homes.
Did you know the stock market can produce the same or higher returns with much less hassle?*
5 Advantages of Investing in Stock
Setting up an online trading account takes less than 15 minutes.
Start up capital and real estate may require $100,000 or more. By contrast you can open an online trading account with $5,000 or less.
When you purchase a stock online and sell it for a profit there are no attorney fees, closing costs, points, etc., just an online commission of $9.95.
The wealthiest people in the world are not fixing up houses and searching for tenants on the weekends. Rather, they are investing in companies and creating their wealth from share ownership.
Most people don’t realize that DOW stocks pay a dividend and can be used for covered call writing. Covered call writing helps any investor generate monthly residual income from stock ownership. In fact covered call writing can produce three times as much monthly income as the rent roll on a multi-family dwelling.
*Here are two stocks you could have invested in over the past five years, whose share prices increased 100%:
*If you had invested $1,000 in Disney stock five years ago it would now be worth over $3,200.
*If you had invested $10,000 in Disney stock five years ago it would now be worth over $32,000.
*If you had invested $100,000 in Disney stock five years ago it would now be worth over $320,000.
*If you had invested $1,000 in Home Depot five years ago it would now be worth over $4,000.
*If you had invested $10,000 in Home Depot five years ago it would now be worth over $40,000.
*If you had invested $100,000 in Home Depot five years ago it would now be worth over $400,000.
In the Wealthy Investor program I teach three major strategies:
Covered Call Writing
Selling a call option means that you would be selling the right, not the obligation, to someone in the marketplace to buy that stock away from you at a later date.
Dividend Capturing
Institutional investors collect millions of dollars per quarter collecting dividends on Dow components like McDonalds, NIKE and AT&T. So can you.
Volatility Trading
Volatility allows you to purchase a stock and program a sell order in your online trading account which will sell the stock once the price rises a specified amount. As stock prices change throughout the day, you’re making money while you are out enjoying your life.*
It’s time to get the financial education you need to become financially free.
So what is your next step?
Order The Wealthy Investors Guide to Stock Market Success or sign up for my FREE Stock Trading and Investing E-Mail List on this page.
In The Wealthy Investors Guide to Stock Market Success, I’ll explain in easy to understand language everything you need to know to get started.
In this original five CD audio series, you will learn the basics of covered call writing and volatility trading and how to use these powerful trading tools in your portfolio.
Yes, you can be a wealthy investor if you get started right now.
* DISCLAIMER: Stocks and options trading involves risk and is not suitable for every investor. The stocks and options prices vary and, as a result, clients may lose or gain from their original investment. Stock illustrations posted on TheWealthlyInvestor.net web site are for illustration purposes only. Your personal results as a trader/investor may vary from the WI students listed above.
