No two people have the same investment strategy. For some, investing in real estate makes sense and excites them, while others prefer the more laid-back approach of investing in the stock market. How do you decide which is the better investment?
Check out our real estate versus stocks guide to see which investment opportunity is right for you.
Real Estate Investing Pros
Real estate investments can take place in different ways, including buy-and-hold strategies involving renting residential or commercial properties, such as shopping malls or office buildings, to tenants.
Another approach is fix-and-flip, where you acquire undervalued properties, renovate them, and sell them for profit.
Real estate investors realize different benefits from each of these investing methods. Here are some of the most common benefits.
Opportunity for leverage
If you qualify for mortgage financing, you can purchase a property worth more than you have available. For example, suppose you have $100,000 for a real estate investment but find a rental property selling for $200,000. In that case, you may be able to borrow the additional $100,000, allowing you to own a higher-priced investment property faster and earn larger capital gains.
However, if you invested the same $100,000 in stocks, you’d only be able to get as many shares as your $100,000 would buy.
Own a tangible asset
Real estate is a tangible asset. This means you see what you own and can control it, unlike stocks, which don’t provide anything to show for your investment except possibly a stock certificate.
Also, you can control real estate, fixing it up, maintaining it, and deciding how much to charge for rent or list the home when ready to sell.
While no one can 100% control the real estate market, you have more control over how your investment performs and can increase your chances of positive returns.
Can offer a steady income stream
If you own rental properties, you may generate income from the…