Has anyone done a serious DEEP financial analysis on if you had a little bit of money is it better to put it in the stock market S&P 500 or to buy real estate? I'm talking about what strategy would give you more of a larger return which I know real estate various pre market. I started writing out a pretty deep analysis and it actually can be pretty even %age return on money but real estate could make more long-term of course depending on market and market trends. Essentially, I have 80 grand to do something with and I'm debating putting it in as a down payment to buy an investment property as a long term rental that would cash flow, appreciate and of course have equity paid into as rental, or if I should just put it in the S&P 500. The goal is to make the MAX amount of money without doing anything crazy to loose it.
Real estate or stock market investment
byu/coolkidz9 ininvesting
Posted by coolkidz9
9 Comments
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The reason I hate real estate investing is not because of returns it’s because of time and work. You have to put so much more time into your real estate because of tenants, property taxes, insurance, maintenance. Maybe I’m lazy or maybe I value my time too much but I just don’t like investing in real estate.
Owning real estate that’s being rented out is like a full time job and requires a lot of work. More so than an index fund, that’s for sure. The returns *could* be higher real estate, although the stock market has always outperformed other than in some key areas, but the work is more
Stocks are easier to start with, but real estate can provide leverage and passive income if managed well.
I will never invest in real estate beyond a primary home. Unless you luck into a coastal ca property the juice is not worth the squeeze. Also tenants beat the hell out of apartments and rental houses. It’s also highly illiquid, good luck selling with a tenant if you’re in a strong tenants rights state
I own real estate and stocks. In all cases my stock out performs real estate holdings.
Real estate is good for steady wealth building and income potential over a long term. And if done well with leverage and low cost loans can be decently attractive.
What eats at your returns: vacancy, maintenance, real estate taxes, interest rates with loans, insurance. And time. Managing real estate is a time suck. Or you can add another item management fees.
Maybe do some research into Bitcoin
I dont think anyone ever talked about this point. Real estate investments have a hard ceiling but not stocks. Real estate is heavily tied to how much people can afford vs their income. Stocks can just keep going up creating ATH and nothing is really stopping it from doing so as there are always going to have fresh money going in (pension plans as an example).
You can also argue pension plan also buy up real estate and rent it out, but rents are also tied to affordability aka peoples income. When the ROI on the property is not enough, it makes no sense for them to further invest into real estate market.
Meaning if you are hoping to double your money without much worry, stocks is the way to go. As it gets harder and harder for real estate to double in value. Just think about it, if you purchase a 600k house, it needs to double in value to 1.2m to break even with interest and property tax. Studies show its the behaviour of forcing yourself to put money aside into investment helps you build wealth (which is what mortgage basically is).
..no, nobody’s *ever* done such a *deep* analysis.
Just kidding: google can probably give you some millions of answers for that. In short: it depends. Personally I’m lazy enough that I prefer ETFs and stocks to dealing with real estate.