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|Should I Invest In Real Estate Or Stock? by AMHcapital: 7:08am On Apr 10, 2020|
Should I invest in rental property or Stock? This is a frequent question that many investors ask themselves before entering the investing market. This article aims to enlighten potential investors on the ups and downs of both real estate and stock investments. So before diving in, know the differences between the two.
Ability to Buy Low and Sell High
In the stock market, money is made by buying low and selling high. However, for most stock investors, this is almost impossible to do consistently as they don’t know everything about the company they’re investing in, its sector, management, competitors, etc.
As for real estate investing, there are a number of strategies where property investors can buy low and sell high almost regularly, such as the fix-and-flip strategy. When following this investment strategy, property investors are basically buying a rental property that is on the market for a cheap price because it needs renovation or for being a foreclosure, rehabbing rental properties, and then selling them for a higher price that covers the purchase price, the costs of renovations, and a profit margin.
The last aspect to consider when deciding whether to invest in real estate or the stock market is taxes. Buying a rental property will require you to pay property taxes. However, there are certain tax benefits provided only to property investors. For example, your cash flow is tax-free, and your property taxes, mortgage interest, operation expenses, and insurance are all tax-deductible. Exactly how much a real estate investor can deduct depends on the rental income.
As for stock investors, their tax consequences include paying capital gains tax on any profits they make from selling stocks. Not only that, even without a sale, investors are required to pay tax on the dividends they receive.
READ: PROPERTY APPRECIATION WITHIN IBEJU LEKKI
Leverage to Build Wealth
Leverage is a tool that real estate investors can use to build their portfolio of investment properties. When you get a mortgage for buying a rental property, you’ll have leverage that you can use to invest in more rental properties with less money down!
Most loans require 20% of the property purchase price as down payment, you can spread balance within 24months of other 80%. Let’s say you put 20% down for the purchase of a #10,000,000 investment property. You only have to pay #2,000,000 now, and you have the next 10–15 (or even more) years to pay the remaining #8000,000 plus interest.
When financing, buying rental property in this way, property investors have the opportunity to buy several rental properties with little money down and increase their rental income (which pays all their costs such as mortgage, taxes, maintenance, management, etc.). This is another benefit of real estate investing which stock investors don’t have.
In general, buying rental property has fewer risks than stocks, especially when investing in real estate for the long term — the longer you hold investment properties, the fewer risks of loss you have as equity and home prices build and rise over time. In addition, the more rental properties a real estate investor buys, the fewer associated risks he/she faces, unlike the stock market where risks typically stay the same.
While stocks have the advantage of being way more liquid, they are also very unstable. As a result, average stock investors not only can’t predict their returns, but they also tend to buy and sell at the wrong times. While the economy affects the real estate market, it is to a much lesser extent than it affects the stock market.
For more information: www.middlechase.com[img][/img]https://medium.com/@middlechaseblog/should-you-invest-in-real-estate-or-stocks-75aeefd42d5c
|Re: Should I Invest In Real Estate Or Stock? by ashleysummer: 5:12pm On Jun 20, 2020|
If I was a prospective home buyer I would be putting those plans on hold at this point. With the stock market wildly fluctuating, and the potential of our economy heading into a recession, I'm not going to buy a home if I don't even know if I'll have a job 6 months from now..
|Re: Should I Invest In Real Estate Or Stock? by AMHcapital: 3:45pm On Jul 03, 2020|
you have a point sir
|Re: Should I Invest In Real Estate Or Stock? by AMHcapital: 3:46pm On Jul 03, 2020|
you have a point sir
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