More on Stocks vs. Real Estate for Investing

Last week Julie had an article published on the blog My Wife Quit Her Job called “Why Real Estate Made Me a Millionaire and Investing in Stocks Didn’t.”

The article sparked some interesting conversations between us and our friends. The interesting thing that came out of those conversations is that most of our friends think real estate investing is too stressful!

O.k., maybe I have spent too much time telling them the horror stories from the mistakes that I made with a couple of multi-unit properties that I bought in Niagara Falls, Ontario. The thing is – those stories are good enough for a t.v. movie!

Real Estate Vs Stocks

Real Estate Vs Stocks

Julie and I both find it easier to tell people about the dumb things we’ve done while real estate investing, than about the $5,000 in rent cheques we took to the bank yesterday.

When our friends commented on the stress of investing in real estate I had to ask how many times in the last month they have checked on their stock investments? The guys around the office talk about their stocks constantly! And our friends, it turns out, check their stocks at least once a day! And two of my good friends just lost 40% and 50% of the money in their stock portfolio in less than 6 months!

You can’t tell me that watching your stocks ride the crazy market rollercoaster EVERY DAY is less stressful than owning good real estate.

I do follow the residential real estate market and news pretty closely, and I see the average house in Canada has dropped 9% in value since last year, but I don’t worry about it. My tenants paid down about 5% of the mortgage, so I have only “lost” 4%… and in some cases, that property also put cash in my pocket after the expenses were paid. And, of course, I only really “lose” the money when I sell my property.

Real estate investing can be very stressful if you manage your property yourself, but if you hire good property managers, like Julie and I do for most of our investments, you will go days without thinking about your property. And you will often go all year without actually worrying about it.

But there are a lot of reasons to love real estate, and I don’t want to be repetitive with Julie’s article so just click on over to My Wife Quit Her Job and check it out! 313b_bannerrev-n-youlowqual22

Learn the secrets to becoming a millionaire real estate investor…in your spare time. Get the Rev N You with Real Estate Starter Tips Guide free when you sign up for our complimentary Rev N You with Real Estate e-zine.

Get started with real estate investing today.

8 Comments

Filed under investing, real estate

8 responses to “More on Stocks vs. Real Estate for Investing

  1. I agree, Real Estate outperforms stocks many times over. Cash Flow in Real Estate is Excellent today with the demand for rental units growing each day.

  2. The_Dude

    Can you give me an example of any property in Vancouver whose current (reduced by some 15-20% since April) price will cash-flow positively?

    Thanks,
    The_Dude

  3. Thanks for stopping in @Cash Flow Cindy! There was an article in the Toronto Star in Friday about it becoming a Landlord’s Market (http://www.thestar.com/article/552532) – and it talks about the decreasing vacancy rates.

    @The_Dude… Vancouver is a tough place to invest for cash flow unless you have a large chunk of money for a down payment. If you can put 20% or 25% down on a property there are some properties that will cash flow now with the financing rates so low. We looked at a couple on the weekend and found one that would probably work (I say probably because we aren’t done our research yet)… but not many people have $130k sitting around for that. If you want to start investing, does it have to be in Vancouver? Could you look in Nanaimo or Port Moody or somewhere within easy reach?

  4. Real estate is a real business that takes effort but does not have the risk of stock investing because the barriers to entry are higher. Stocks have so much liquidity and ease of entry that their moments are violent and therefore the risk is not worth the return.

  5. Hello Free Acai Berry,

    Nice use of promoting your site! Besides that, I couldn’t agree with you more and it’s a side of investing that many investors don’t consider – ease of entry. That’s probably why so many equity investors don’t receive very good consistent returns….because it’s easy to invest without doing your research. Read an article to buy X stock, and in 2 minutes you can now own that stock! Real estate takes far greater time and effort to “get in”, and thus often weeds out a lot of potential “lazy” or “busy” investors. Of course, in Vancouver we’ve had the issue of too many speculators jumping into the real estate market buying up pre-construction condo units without having an exit strategy. And now that prices have started dropping, they are hurting. Again, they likely didn’t take the time to understand real estate investing, and now, many of them are taking huge losses because they can’t afford to actually close on the property. That’s why they’re considered speculators not real estate investors. BIG difference! Thanks for your comments!

    Dave

  6. Have you ever thought about investing in the U.S.? I know a few people from Canada who invests in the U.S. Indiania is a great Cash Flow Market. Houses are selling for as little as $39,900; bringing in $600.00 Rents! Management is all in place with a one year lease. This particular house was rehabbed bringing your maintance cost down. If interested in viewing cash flowing properties in Indiania click on the following link
    http://serene.ewimultiplestreams.com/index.php?base=featured

  7. Thanks @Cash Flow Cindy… we personally haven’t done more than just look at U.S. real estate. At this stage, we intend to stay focused on the Canadian market. But, we definitely know a lot of people that are interested in U.S. investing because there do seem to be great opportunities in many states.

    We’ve also did an interview with our mortgage broker on how to get financing for U.S. investments if you’re a Canadian. Any Canadians interested in buying in the U.S. can check out the podcast that we did here:

    http://revnyou.com/Canada_and_US_Financing_Options.html

  8. Pingback: Investing in Real Estate vs. Stocks |

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s