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Is real estate better than stocks?

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Aisha | 08 Apr 2015, 11:24 AM Agree 0
Hello everyone,

I have joined this forum as i'm a new investor looking for some friendly help.

My partner and I have saved up some money and want to invest.

The two markets we are most interested in are real estate and stocks.

As Real Estate experts, what are the advantages of investing in the market?

Thanks,

Aisha
  • | 09 Apr 2015, 12:57 AM Agree 0
    Hi Aisha

    Well you & your Partner took an pretty awesome decision to invest in Real Estate.Canadian Real Estate Market is the most relevant sector to invest in today as the interest rates and mortgage rates are pretty low.

    Generally Real Estate investment is of two types - Residential and commercial. So you first have to decide where you want to invest.

    Real Estate Pro's over Stocks -

    Investment is a Risk whether it's Real Estate or stocks. But Real Estate do have some relevant Pro's over stocks in Investment.

    1. Real Estate Market is volatile while stocks are not.

    2. You can sell the property through what we call a 1031 exchange, and you don't have to pay capital gains taxes, as long as you invest the money into a similar kind of property type.

    3. Your property will always stay as a illiquid investment and you may sell it whenever you feel like gaining profit.

    Hope it would be helpful to you

    Pete
  • Aisha | 10 Apr 2015, 08:48 AM Agree 0
    Hi Pete,

    What fantastic advice! Thank you very much.

    I think we would be looking to make a commercial investment.

    My worry though, is that the gains in revenue may not outweight the gains in costs.

    Aisha
  • rickrose.com | 10 Apr 2015, 03:20 PM Agree 0
    Hi Aisha,
    As an Agent who helps clients buy and sell mainly investment properties, I would advise you to not start out with commercial properties, it's a different world! Start out with a duplex or triplex and not single family residential. If one of your tenants moves out you don't want to be in a 100% loss situation, at least with a duplex/triplex the others will pay your mortgage and expenses.
    Make sure you don't get emotional about a property, it's all about the numbers and always buy a property with a positive cash flow.
    Over time you'll make money by having your tenants pay off the mortgage, give you monthly positive cash flow and the property will appreciate in value.
    There are three strategies available to you. The flip, the buy and hold and selling your purchase through the rent to own method. All should be used depending where you are in your investment career. Find a good, experienced in positive cash flow Real Estate Agent and take their advice.
    If you need to brainstorm, get in touch with me. 519-567-2350
  • Jon | 11 Apr 2015, 10:39 AM Agree 1
    " You can sell the property through what we call a 1031 exchange, and you don't have to pay capital gains taxes, as long as you invest the money into a similar kind of property type."

    huh????

    Im not sure that is correct. To my knowledge this tax advantage exists in the US, NOT in Canada.
  • Rick | 11 Apr 2015, 12:05 PM Agree 0
    Jon
    You are correct, that's only in the states.
    Rick
  • pete | 14 Apr 2015, 12:38 AM Agree 0
    Hello

    Jon and Rick thanks for making me correct, 1031 Exchange actually belong to states only. But I believe my main concern was to differentiate between stocks and Real Estate Investment only.

    Pete
  • Aisha | 14 Apr 2015, 11:35 AM Agree 0
    Hello, thanks for everybody's comments.
    Rick, why would you advise somebody going into commercial property? What is the different world you suggest?
    Our plan is to build up some money for our retirement, so we would be looking for a long-term investment. A buy and hold as you put it.
    Aisha
  • pete | 15 Apr 2015, 06:36 AM Agree 0
    "What is the different world you suggest?
    Our plan is to build up some money for our retirement, so we would be looking for a long-term investment."

    Hi Aisha

    If you are not planning to go for Commercial Real Estate Investment then I think Foreclosure and Rental homes can be a big source to build up some money for your retirement.

    Pete

    • suniltulsiani | 15 Apr 2015, 07:04 AM Agree 0
      You have to gain real experience through real people. Dig deep in market and find some real estate guru. They will give some beneficial advice.

      Sunil Tulsiani
  • suniltulsiani | 27 Apr 2015, 03:10 AM Agree 0
    It will depends on your decision. Most of time Real estate is Far better then Stock. Because Real estate give us time to take decision. Means the rates of real estate not drop suddenly. It takes time. But stock market changes on daily basis.
  • Aisha | 07 May 2015, 11:20 AM Agree 0
    Thanks for the advice. Has anyone delved into land investment? It's another area that we are considering.
    Aisha
    • John Edmunds Las Vegas | 08 Jun 2015, 09:36 PM Agree 0
      Land has virtually no cash flow. Well maybe if you leased it for storage etc. but local zoning might prohibit that. I agree with previous comments, commercial real estate is for very experienced investors, start with something smaller. Personally I like single family better than small multi-family, the reason being you can sell a single family home much easier and quicker than an apartment building. Buy in the neighborhoods that took the biggest hit in 2006-2012, they will be cheaper but the cash invested will be less as well, lower priced properties will rise the fastest as the market continues to improve, they will also rent easier.
  • talkcondo | 22 May 2015, 04:45 PM Agree 0
    Hey Aisha,

    Hopefully I'm not late to the party here -- had a couple of questions for you:

    -What is your timeframe to hold the investment?
    -What market are you looking to invest in? (As in, location/City)

    We personally invest in Real Estate - never touched the stock markets because of the reasons given above. We've found far better returns (on both cash-flowing monthly, and appreciation).

    Thanks
  • Aisha | 26 May 2015, 11:53 AM Agree 0
    Hi,

    In terms of timeframe, we would be looking at 10 years and somewhere in or around Vancouver.

    Thanks,
  • BigNumbers | 01 Jun 2015, 11:10 PM Agree 0
    Aisha, ignore the 1031 tax comment - that isn't applicable for Canada. As a newbie investor maybe I can share my story. I bought a condo about 6 years ago and have since moved out recently (2 years ago) and rather than selling it, I rented it out. It's been good so far and the nice thing about a condo is that it's hands off - essentially all the maintenance is handled through the condo board. If you're not handy this is the way to go. the risk with condos (and it can be huge) is the management of the condo board. You're essentially buying into a corporation. Condo fees can kill an investment through the lower cash flows. Also, special assessments can/do happen.

    For these reasons I'd stick to a duplex or single family home no older than 5-10 years old.

    Something else to consider - I know all readers here are pro-real estate over stocks but with stocks you have the potential to earn huge gains (tax free) through a TFSA account. If you have never opened one both you and your partner have about $70k contribution room for tax-free growth.
    • duane | 06 Jun 2015, 11:55 AM Agree 0
      like to know more about this please .. profit on stocks are tax free?
      thank you
      Duane
  • Aisha | 03 Jun 2015, 11:32 AM Agree 0
    Thanks for the advice, that is really helpful. Seems like you almost stumbled into property!
    Something else we have been looking at is land investment to tie down some money.
    Aisha
  • duane | 06 Jun 2015, 11:56 AM Agree 0
    ask your self this.. will the bank lend you money to buy stocks?
  • Abigailbowker | 05 Jul 2015, 02:41 AM Agree 0
    As the value of real estate has skyrocketed, owners have become enamored of concluding that real estate is now a safer and better investment than stocks.Real estate provides better returns and helps you retire much earlier than the stock market if you take the time to educate yourself about the market and buy.



    ...........................................
    http://www.ethanproperty.com.au/property-management-home/
  • Aisha | 13 Jul 2015, 11:07 AM Agree 0
    Good point Duane. I need to work out if I have the time on top of my schedule to manage a rental(s) and if I can make a profit.
  • Ralph | 03 Sep 2015, 04:06 PM Agree 0
    I suggest you forget Vancouver, nice place to live but not to invest, nearly impossible to cash flow property there, look into NE BC. Prices in FSJ & Dawson are less than half but rents are third-highest in BC , with brand-new units, rental pool options and good appreciation.
  • jacobtruax | 07 Sep 2015, 01:09 AM Agree 0
    I think real estate is better than stocks.
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  • Janet Morgan | 19 Oct 2015, 02:31 AM Agree 0
    hi...

    According to me real estate is better than stocks because this market does not depend upon economic fluctuations.
    Real estate can be a potential hedge against inflation as historically, rental rates and home prices rise with inflation. This provides a potential inflation hedge for both your rental income and sale of the property. Since your mortgage payments will not increase with inflation, it offers a benefit over time.

    Traditional equity investments are not as directly linked to inflationary measures. Although prices do tend to rise over time, the market cannot offer the same potential inflation protection as real estate.

    Another factor to consider when choosing to invest in real estate or the stock market is to factor in your time as a cost during the analysis. While you do need to do some research when deciding which funds to buy, you can purchase traditional equity investments in a matter of moments.

    You can also head to <a href="http://californianestates.com/">http://californianestates.com/</a> to know which is better.
  • Aisha | 30 Oct 2015, 07:55 AM Agree 0
    Hi Janet, good analysis and interesting information regarding inflation. It has been a while since my original post, but we have decided to go down the real estate route. I will keep you informed!
  • AnnaDanishek | 26 Apr 2016, 07:40 AM Agree 0
    Money, stocks, bonds and precious metals have higher liquidity than real estate. All of them enjoy high demand from wide audience of potential buyers, high product, but it is more difficult to estimate the value of real estate. Property location, condition and local market dynamics affect its price.
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