Why Invest In Real Estate Over Stock
Let me start by giving you this idea to ponder.
Which decision do you think the bank would consider - giving you a mortgage loan to purchase a home or a personal loan to go off and play the stock market? Even if you invest in the proverbial "cannot miss" stock there is no guarantee the stock will not crash at some point and become worthless.
That property you may have bought? It's still there and is far less likely to lose money than the stocks.
Stocks are intangible while real estate is something you can walk up to and dig your fingers into, smell and taste if you are so inclined.
Your loan officer can drive by every day and look to see it is still there.
Need to get another loan.
You can use the property as collateral.
It is much more difficult to do that with stock.
How many advertising pieces have you received offering you money to gamble in the stock market? How many newspaper ads have you seen or emails have you received offering mortgage financing? Hundreds if not thousands.
I cannot recall ever getting one piece of advertising offering money for nothing to use in the crap shoot called the stock market.
Have you compared lending rates between personal and mortgage loans? That in itself is shocking when you consider how much it costs to borrow cash versus home loan funds.
Banks know you are not going to crank up your home and leave for parts unknown.
Property is by far the safer investment so the bank's loan officer is much more likely to smile and write a mortgage check.
Here is more food for thought.
What are the possibilities of locating an undervalued property or an undervalued stock? Real estate can be undervalued for any number of reasons.
People move on the average every five years now.
They want to move up the ladder.
They want to move the house they are in quickly and will take the first reasonable offer.
Divorces and estate sales are two more arenas to find property bargains.
A family member has passed on and their heirs want to liquidate everything pronto so they can get their piece of the estate.
You can find some very motivated sellers here.
In a divorce situation the estranged couple the end cannot come quickly enough.
I agree these tactics may strike some as tacky, but consider that the property will be put back into use by some grateful family.
You are providing a service and you are in the business to make money.
Remember that stock? I am sure you could find great reasons why it is undervalued.
It may be in the research phase and is expected to pay off in the end.
There may be a takeover looming.
It is up to you to look at all the information on the stock and determine if it is undervalued.
That is of course if you can get your hands on the information.
One final thought on why I think real estate is far better to invest in than stock.
Let us assume you purchased a home in an up and coming area for $150,000.
The city comes in and puts in landscaping, new sidewalks, a park, and a number of other improvements.
The house has appreciated in value to $250,000.
Let's say your stock has appreciated and is now worth $28,000 from an initial $20,000 investment.
Which of these do you think will be easier to access the profits without disturbing things? With the home you can refinance and draw on the equity generated from the appreciation.
With the stock you are going to have to sell some of it.
You will have to pay taxes on what is sold.
There are no taxes on the home equity you pulled out.
Now before some of you stock market experts get all up in arms let me state here that you can, and countless have, made enormous wealth in the market.
But speak to any savvy investor and he or she will tell you their best gains were from real estate.
Which decision do you think the bank would consider - giving you a mortgage loan to purchase a home or a personal loan to go off and play the stock market? Even if you invest in the proverbial "cannot miss" stock there is no guarantee the stock will not crash at some point and become worthless.
That property you may have bought? It's still there and is far less likely to lose money than the stocks.
Stocks are intangible while real estate is something you can walk up to and dig your fingers into, smell and taste if you are so inclined.
Your loan officer can drive by every day and look to see it is still there.
Need to get another loan.
You can use the property as collateral.
It is much more difficult to do that with stock.
How many advertising pieces have you received offering you money to gamble in the stock market? How many newspaper ads have you seen or emails have you received offering mortgage financing? Hundreds if not thousands.
I cannot recall ever getting one piece of advertising offering money for nothing to use in the crap shoot called the stock market.
Have you compared lending rates between personal and mortgage loans? That in itself is shocking when you consider how much it costs to borrow cash versus home loan funds.
Banks know you are not going to crank up your home and leave for parts unknown.
Property is by far the safer investment so the bank's loan officer is much more likely to smile and write a mortgage check.
Here is more food for thought.
What are the possibilities of locating an undervalued property or an undervalued stock? Real estate can be undervalued for any number of reasons.
People move on the average every five years now.
They want to move up the ladder.
They want to move the house they are in quickly and will take the first reasonable offer.
Divorces and estate sales are two more arenas to find property bargains.
A family member has passed on and their heirs want to liquidate everything pronto so they can get their piece of the estate.
You can find some very motivated sellers here.
In a divorce situation the estranged couple the end cannot come quickly enough.
I agree these tactics may strike some as tacky, but consider that the property will be put back into use by some grateful family.
You are providing a service and you are in the business to make money.
Remember that stock? I am sure you could find great reasons why it is undervalued.
It may be in the research phase and is expected to pay off in the end.
There may be a takeover looming.
It is up to you to look at all the information on the stock and determine if it is undervalued.
That is of course if you can get your hands on the information.
One final thought on why I think real estate is far better to invest in than stock.
Let us assume you purchased a home in an up and coming area for $150,000.
The city comes in and puts in landscaping, new sidewalks, a park, and a number of other improvements.
The house has appreciated in value to $250,000.
Let's say your stock has appreciated and is now worth $28,000 from an initial $20,000 investment.
Which of these do you think will be easier to access the profits without disturbing things? With the home you can refinance and draw on the equity generated from the appreciation.
With the stock you are going to have to sell some of it.
You will have to pay taxes on what is sold.
There are no taxes on the home equity you pulled out.
Now before some of you stock market experts get all up in arms let me state here that you can, and countless have, made enormous wealth in the market.
But speak to any savvy investor and he or she will tell you their best gains were from real estate.
