3 Reasons Why I Prefer Real Estate Investing Over Stocks.

In this post I want to share with you 3 reasons why I prefer real estate investing over investing in the stock market. I got the idea from Dean Graziosi, if you haven’t read his new book Millionaire success Habits, I highly recommend you pick up a copy. Keep in mind this is my opinion and I’m not saying that you shouldn’t invest in stocks or that I wouldn’t invest in stocks, what I’m saying is here are 3 reason why I prefer real estate investing, does that make sense?

Here they are….

Reason #1 – No Leverage

You have to have money to invest in the stock market. When you are going to buy stocks you need to put up your own money to go out and buy it. There is no using leverage or a down payment. If you want to buy 100 shares at a dollar a share you need 100 dollars in order to purchase. You can’t come up with 20 dollars and say, “hey I’m gonna leverage the other 80 with my 20 because this is an investment” it doesn’t work that way with stocks.

 

Reason #2 – No Control

You have no control, in fact you have zero control when it comes to the ins and outs of that company that you are buying stocks from. For instance, I buy stocks from apple, I don’t have any control on what apple is going to do regarding; product launches, new products development, the products they should not be selling anymore. Nor do I have control over the way they handle their finances, marketing etc. Therefore once I buy their stock and invest my money my money is riding on them. I am leaving my money in their hands and hoping that they are making wise decisions. And those decisions come down to owners, CEO’s and people in the boardroom. And hopefully eventually I will get a return on my investment.

When it comes to real estate it’s a different case. One of my current renovation projects, I can control it. I can go and physically touch it. I get to make the important decisions such as the contractors that I hire, the quality of the materials that I put into my project. I get to decide if the price that I purchase for is suitable for me and most importantly I get to calculate a return on investment.  I have control over all of these important decisions. Many times I do have other, people advising me and sometimes guiding during the decision-making process but at the end of the day I have full control over my decisions. Now, there are certain factors that I might not have control over but they are minimal. In fact, you can minimize these based on your level of education and understanding in the investing business.

 

Reason #3 – No Discounts

There are no discounts when it comes to the stock market. So I will give you a quick example. The aforementioned renovation project, is a three-family home located in Elizabeth, New Jersey. I purchased the property for 150K which was a pretty sweet deal. I say this because just a month ago the property across the street; a two-family home sold for 150K. So I got my property at a discount why? Because I was able to negotiate. I found somebody who needed to sell the house and they were willing to trade equity for peace of mind. The house needed a lot of renovations. It had issues with the electrical and the plumbing and was giving the owners  a lot of management headaches. When it comes to stocks if the price is 1 dollar you’re not buying it for 50 cents or 75 cents you’re buying it for a dollar. There are no discounts on stocks.

 

And those are my 3 reasons why I prefer real estate investing over investing in the stock market right now. I’m curious to hear what you have to say about this topic, shoot me a message or drop a comment below.

Talk to you guys later.