Which is the better place to invest your money: stocks or real estate? Both have some great benefits but real estate seems to clearly win. Here are some of the things you may want to consider for your real estate portfolio.

Why Do I Invest in Real Estate? I did not come to invest in Real Estate by chance; I took a lot of time researching every investment option I could. Before I started investing in Real Estate I had some money in the stock market, but I never felt good about my investment. If the market went up, my accounts went up and likewise, if the Market went down so did my investment. I had no control over the investment and the individual stocks I picked tended to be affected by market conditions that had nothing to do with the stock itself.

I invested in mutual funds, which did okay but also seemed to basically follow the market. I even dabbled in stock options to try to increase my returns. Options were a great way to lose a lot of money very quickly!
I was pretty young at this time in my life and I really wanted to grow my money into something big. The stock market did not seem to be getting me to where I wanted to go. I did a lot of research on other investment vehicles that would multiply my money. I looked at different ways to invest in the stock market, mutual funds, bonds and I even looked starting my own business or buying a franchise.

I realized a couple of things while doing this research on investment options. The first thing I realized was that I already had a business since I was a REALTOR®. Many people think of being a Real Estate agent or REALTOR® as a job, but really we are running a business. We get paid on how much we sell or others sell if we have other agents in our team. We have a lot of expenses, marketing is extremely important and delegating and building a team is extremely important.
The second thing I realized was investing in real estate could provide the incredible returns I was looking for. I could take control of my investment with rental properties and there were so many other plusses that it seemed like a no brainer.

Reasons why real estate is better than stocks

1. I can be in charge and have control. Every physical real estate investment you make puts you in charge as you are able to make improvements, cut costs, raise rents, and market accordingly. Of course, you are still at the mercy of the economic cycle, but overall you have much more leeway in making decisions. When you invest in a public or private company, you are a minority investor who puts his or her faith in management. Sometimes managers commit fraud or implode their companies. Nobody cares more about your investment than you.
2. Control & Leverage. One of the biggest advantages of real estate investing is the ability to use leverage in a safer manner. It is possible to invest in stocks using leverage through a margin account. The main issue, aside from increased volatility and variable interest rates, is margin calls. In a big bear market (which will come as it always does) the investor will be forced to come up with cash to cover the margin call. Mortgages, however, are generally long term loans, are fixed at low interest rates, are collateralized with the property itself, and are non-callable. Leverage, of course, works both ways, and there are plenty of real estate investors who were ruined in the recent housing market downturn due to using too much leverage, but as a general rule, it is far safer to use in real estate investing than in stock investing. One more important point to remember is where can you go to borrow money to invest and have someone else paying down that loan. When you rent out your real estate investment, the tenant’s rent is paying off that mortgage.
3. Tax advantageous. Not only can you deduct the interest on your primary home, but you can also sell your primary home for tax-free profits up to $250,000 for singles and $500,000 for married couples if you live in the home for the last two of a five year period. If you are in the 28% or higher tax bracket, it behooves you to own property. All expenses associated with managing your rental properties are also deductible towards your income. Income limits do apply, however, so make sure you don’t make much more than ~$166,000 a year total.
4. Physical & tangible asset. Real estate is something you can see, feel, and utilize. Stocks aren’t even pieces of paper anymore, but ticker symbols and numbers. When the world comes to an end, you can seek shelter in your property. Real estate is one of the three pillars for survival, the other two being food and shelter.
5. Easier to evaluate and put a figure on. If you can calculate realistic expenses and rental income that’s all you really need when it comes down to valuing a piece of property. If you can borrow at 4% and rent out for a 6% yield, you’ve likely found yourself a winner. There’s not only the cash flow component but the underlying equity component that helps investors build wealth. Stocks require you to trust what the company reports. There are countless ways for companies to massage their numbers to make things look better than they really are e.g. adjusting accounts receivables, adding one-off gains, and using various amortization or depreciation strategies to name a few.
6. Less unpredictability. Your house value could be tanking and you would never know it since there isn’t a daily ticker symbol. During bad times, the utility of your home really helps soften the blow as you enjoy your home and create great memories. When your investment is less volatile, it’s much easier to stay the course and not sell at the bottom.
7. A source of pride. Making money for money’s sake is a pretty empty feeling. Every time I drive by my rental properties I feel proud to have made the purchases years ago. I know that my money is working as hard as possible so I don’t have to. Real estate is a constant reminder that taking calculated risks over time pays off. There is an indescribable feeling nobody tells you once you’ve closed on your property. Even though the bank probably owns most of it in the beginning, you literally feel like the King or Queen of your castle. When you die, you can pass on your pride to your children or closest companions to let them create their own memories.
8. More insulated. Real estate is local. If you’ve made a good decision to buy in an economically strong region, you will be more insulated from the national economy or the global economy. Spain blowing up is likely not going to affect the rent you can charge. Look at prices in superstar cities such as Manhattan, Hong Kong, Singapore, London, Paris, and San Francisco. They fall the least, recover the soonest and gain the most. Of course, industries in your area could suddenly disappear and leave you broken as well.

Conclusion

There are many other reasons why investing in Real Estate is my investment choice; tax advantages, equity pay down, appreciation, serving your community by providing housing are a few others. The biggest advantage of investing in Real Estate gives you is you can buy below market, add value and rent for positive cash flow. If you buy properties right you can make more than your initial investment back before you even rent the home. Your cash flow can provide you lifetime income with no retirement calculators and you have control over your investment to increase its value.