3 facts that make income producing real estate superior to stocks
Income producing real estate and stocks simply differ in many different ways. With real estate beating stocks in many of those areas.
Most don’t know because it’s not anything that major TV stations promote.
You’ll never here Jim Cramer on Mad Money speak about how well apartments are performing in real estate. Because it’s boring and slow.
You’ll never hear Suze Orman speak about how real estate investors can now take 100% in bonus depreciation unlike previous years. Why? It’s not exciting to the masses.
The things that are promoted are not designed to help you maximize your financial profitability. They are designed and promoted to sell you excitement and products.
So what’s easier to sell, a stock that’s literally moving by the second, or real estate that moves like a snail.
Stocks may move fast, but here’s why real estate is superior.
Real estate doesn’t plummet in value in 1 day unlike stocks
Stocks literally can lose major value in the course of a day. This bares major risk. A default rule as an investor is to mitigate risk at all cost.
Let’s take a look at 2 examples. The first is a little over a month ago. Facebook stock plummeted 20% in one day. I mentioned in a recent email blast to my subscribers that anything that loses value in that short of a time span, you should run from.
This shows how volatile stocks are.
The second example is about 2 weeks ago when Tesla’s CEO Elon Musk was filmed smoking weed. Guess what happened to its stock by the end of the day.
It fell 9%. Once again, the volatility bares major risk.
Stocks do not provide major tax advantages the way that real estate does
Real estate provide the best tax advantages there are in the country when it comes to investing. Stocks provide very little tax advantages.
Taxes is the number one expense to Americans. One of your goals should be how do I lower my taxes. Here are a few from real estate.
Depreciation is the king of all taxa advantages. This is being able to claim wear in tear on a property building and taking that loss (on paper) against your taxable income. Even though the building is going up in value. This is a major tax benefit.
First, if you haven’t heard my interview about the 1031 exchange I suggest you take a listen featuring Tom Gustafson, a 1031 exchange expert and qualified intermediary.
The 1031 exchange is the ability to exchange a like kind investment property for another while differing and using those same capital gains to buy another property.
Essentially helping you grow your assets and cash flow.
Stocks are manipulated to push prices; real estates value is based on income
Its no secret that stocks can be manipulated. The manipulation is used to push prices and stable prices for the most part.
One way this is done is by using high frequency trading. High frequency trading allows high powered computers to seek out small anomalies in the market and carryout a large transaction in seconds, markup the price by a few pennies and sell back to the market in seconds.
There is no real value added to these companies such as a new service to increase income. Yet their stock price still manages to go up making the company “worth more”.
Income producing real estate such as apartments aren’t easily manipulated. Thats because its a hard asset and the value can be identified through a thorough due diligence process identifying true income and expenses, and basing its value from the net operating income.
As you can see, real estate and stocks differ any many ways. I could have expanded heavily on the tax benefits of real estate investing alone.
And could have went on and on about other stock manipulation that goes on.
I hope that after reading this, you have a better picture of the benefits of real estate and how it outweighs stocks by a ton.