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For the modern-day investor, having some real estate investments feels very good. The same, however, cannot be said for stocks. This is mainly, they lack a sense of tangibility, and the close one can get to seeing them is looking at price fluctuations as they happen in a chart. Real estate, on the other hand, is a solid investment where an investor can physically walk to the property they have acquired and assess the value that his or her money has brought.

Historically, the stock market has been known to be the home of consistent booms and busts, thereby producing higher returns. It was only one time that the real estate earnings rivaled that of the stock market in the USA, during the Great Moderation that happened between 1990 and 2006. However, this type of investment has had the worst losses in the history of finances. The increased volatility, incorrect research, and unprecedented news have been a great pain to the investor with some losing their whole investment in a single trade.

Some of the perks of real estate over the stock market include

One of the most central ways to invest in real estate is a common process known as “buying and flipping”. Under this model, real estate buyers purchase a home, add value to the property through home renovations and improvements, and resell for a profit.

For example, if one were to buy a home for $500,000, strategically invest $100,000 into value-boosting home improvements, and resell for $800,000, the profit from this house alone would be $200,000.

The first step involved in home flipping is to have your home inspected. By assessing the current state of the property, you will become aware of the areas most in need of improvements. After you’ve determined the areas of your property most in need of renovation, the next step is to actually implement these upgrades. Depending on the renovations being done, it may be necessary to demolish current structures or re-establish the foundation before moving on to new construction.

Real estate and stocks both have the potential to yield high profits, however they operate in completely different ways. The biggest difference is that real estate is a tangible asset, whereas stocks are not. Real estate investment involves acquiring a physical property and choosing an exit strategy to make money. Stocks involve purchasing a share or shares in an existing company, which is something that cannot be physically represented. This difference makes stocks much more liquid than real estate, which means that stocks are easier to buy and sell at a faster pace.

Another key difference between these investment types can be seen by looking at their required management strategies. Compared to long term investments and stocks, real estate often demands a much more hands-on approach, especially if you opt to flip houses for a profit. While working with property managers or a hands-on business partner may alleviate some of this responsibility, there is always a certain level of involvement that comes with real estate investments. Stocks, on the other hand, are more hands-off and typically require long waiting periods and low levels of involvement.

Benefits of real estate investment

There are several benefits of real estate that make it an excellent investment choice. With the right property manager, rental home and support, you can generate consistent passive income — which can, in turn, be used to grow your investment portfolio.

Real estate is also associated with numerous tax benefits. Mortgage interest, rental property depreciation, and even property taxes can count towards deductions and ultimately minimize expenses.

Most notably, the biggest benefits of real estate investing is that you can get started with little or no money. Typically, only a down payment of 20% is required to purchase a house. Additionally, with house hacking, crowdfunding and private money lenders, you can generate enough money to finance a property faster than you might imagine. This makes real estate a highly accessible investment strategy for those who can identify the right financing sources.

For the modern-day investor, having some real estate investments feels very good. The same, however, cannot be said for stocks. This is mainly, they lack a sense of tangibility, and the close one can get to seeing them is looking at price fluctuations as they happen in a chart. Real estate, on the other hand, is a solid investment where an investor can physically walk to the property they have acquired and assess the value that his or her money has brought.

Historically, the stock market has been known to be the home of consistent booms and busts, thereby producing higher returns. It was only one time that the real estate earnings rivaled that of the stock market in the USA, during the Great Moderation that happened between 1990 and 2006. However, this type of investment has had the worst losses in the history of finances. The increased volatility, incorrect research, and unprecedented news have been a great pain to the investor with some losing their whole investment in a single trade.

Some of the perks of real estate over the stock market include