If you're looking for ways to invest some of your hard-earned income, you have many options. You can look into stocks, you might open up a side business, you could invest in a startup or you could purchase real estate. If you're having difficulty selecting the best solution, there are some who say real estate is the best option. Here's why.
You Have Physical Property to Rent
If you buy stocks, you become a partial owner of the company you bought shares from, such as Amazon or Apple. You then get a nice piece of paper. On the other hand, you can drive past your rental at any time. You can learn first-hand how to manage a rental property. You get to collect rent, and you decide how much you will charge for rent too.
Fund Your Retirement
With rental property, you will get a monthly paycheck. Yet, you still own the property. So, you might rent the home for 10 or 15 years after you have purchased it. By then, the price of the home may have gone up $15,000. If you sell it, you will make $15,000 profit to help fund your retirement. Now, imagine if you had five rental properties that all went up in value after a decade or two. On the other hand, you can also live off your rental payments.
The average return for stocks can range between 5 and 10 percent. Although, that can swing dramatically in an extremely volatile market. If a company goes out of business, your stocks won't be worth much. In contrast, real estate can give you an average annual return of 10 percent. If you hold the property for at least a decade, your return can be much higher.
You can purchase stocks as investments, but you will have little say in how the company is run. You just have to sit back and hope the CEO makes the right decisions. This can work at times, but it can also backfire. When you own rental properties, you get to decide how to lawfully run your business. If something isn't working, you can make changes immediately. You don't have to wait on anyone else.
Create Cash Flow Right Away
The highest dividend-paying stocks return 4 percent or less annually. Of course, a stock could increase in value but you won't see that money until you sell it. With real estate, you can rent a property right away and start making an income. You can also flip a fixer-upper for the potential of thousands in profit each time. Plus, with a lot of research, you can become a real estate expert quite quickly. It won't take long before you start to understand market conditions, economic conditions, the value of homes and market rents.
As you can see, there are many reasons why investing in real estate is more attractive than investing in stocks. You can realize a cash flow right away, and become an expert in your field quickly.