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Real Estate vs Stock Market

5 Ways Real Estate Wins Big Where Stocks Fall Short

People will always need a place to live.

There will always be a strong demand for rental properties, whether temporary or long-term, provided you choose the right area. Not everyone has the desire or the means to own their own property. Since the 2008 crash—caused in large part by shady lending practices—loan requirements have tightened considerably. It’s a lot more difficult to get a loan, and not everyone can qualify through the new, stricter rules, even if they can afford the monthly payments.

Rental property provides great cash flow.

Owning $200,000 in Apple stock will give you an annual dividend of around $3,400. If you abide by the 1% rule (and you should), owning a $200,000 rental property will give you $24,000 of income annually. Also, will Apple still be around in 20 years? Maybe, but I’ll bet your rental still will be.

Real estate is less volatile.

Real estate has its ups and downs, just like everything else. But almost every local market, over time, trends up. Historically, the 2008 crash was an anomaly because it was caused by real estate itself.

Yes, there will always be pockets of land that don’t follow the trend—Detroit immediately comes to mind. Detroit has been steadily losing population since its 1960s heyday. Property values cannot go up when population goes down, and Detroit is down by more than half. However…

The population is growing, but the earth isn’t.

As more and more people inhabit this planet, land will become more and more precious. Granted, this isn’t a huge dilemma currently—the world has many places where you can go miles without seeing another human or anything remotely related to civilization. But the most popular areas will continue to grow, and land is becoming more and more precious in many parts of the world.

If you’re a property investor in the United States, you have an extra advantage. Lots of folks from around the world see value in owning American property. It isn’t unusual for Canadians, Chinese or Middle Easterners to buy property here in the states. They realize that the stability and strong American economy makes it a great place to invest.


Leverage, baby.

If you have a Margin Account, you can use leverage to buy your stocks. But the most you can borrow is 50% of the stock purchase price. Not every stock is marginable, either.

Real estate is up to 100% leveragable, using a mortgage to purchase your property. One hundred percent financing is usually available for owner-occupants—investments are more typically 75%-80% financed—but a far larger percentage of the purchase price can be financed than with stocks and other investments.

Real estate is a solid way to invest in your future and your retirement. A diversified portfolio can help guard against losses when one another asset class loses value. Unlike other investments, real estate can return money over the lifespan of the asset. It’s kind of a no-brainer.

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