re: Real estate or stock market?

I'm not saying that the stock market hasn't produced good returns if you look back over it's history, I'm just stating that most investors don't have the stomach to stay invested in bad times. What would you do in 2008, if your million dollar account went down 45%? What return would it take to get even after going down 45%?

Just so you know that I do believe in the market. I have about 1/3 of my net worth in market related investments, 1/3 in real estate, and 1/3 in my business.

This is how I look at a real estate investment:
Buy a 100k house with 20% down financed for 15 years. Rent covers note, taxes, insurance, maintenance. After 15 years, house doesn't appreciate or depreciate. What is your rate of return? I know this is a rather simple example, but the return is over 11%, and now the house is paid for, making the return much better for the next 15 years.

Personal preference I guess. I believe I have the stomach for stock market more than stomach for landlord/tenants, etc.

Yea I agree that a 2008 downturn would be very tough to watch happen to my stocks but so would having bad tenants or even no tenants for a couple of months. Different scales of bad but I also value any time I have and think I would rather take slightly less returns while doing less work than vice versa.

I obviously have no experience renting a house or anything like that though so it could be a much easier process than I am thinking it is.

I guess for me the deciding factor has always been cost of entry. You can get into the stock market with very little actual $, and then just get incrementally more and more invested.

Real Estate requires (at least I think it does) a comparatively large initial investment, so it's easy to get priced out of RE.

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I do find it interesting how most people are more comfortable with the stock market when it is at all time highs. There were not too many people feeling that way in 2008.

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It all depends on your historical perspective, I have been in the stock market for about 38 years, 2008 was just a bump in the road compared to 1987. Real estate over the long term has had its share of down turns, here were not many people in the housing market during the early 1980s that were as comfortable with real estate as those in it today.

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uote:
Iowa Golfer


What part of Florida and what kind of product? Multi-family, industrial, retail?

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Pompano Beach. Lauderdale by the Sea. Some very northern Ft. Lauderdale. Bay Colony Club to be exact.

Condos. All on water. The furthest is on a canal with one fixed bridge. The boats normally can lower their masts to make it below a lot of fixed bridges. Depends. All have dockage available or deeded.

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If someone can manage their taxable income to certain levels to meet the Fed tax code,

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I have no troubles with this on my RE. others can do it just as easily.

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You are writing like RE never goes down in value,

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First off i never said that, and no, not at all, that just wasn't the point. Yes, and stocks can crash as well. right? I was just showing him comparables and asking him what his comparisons were that he was talking about.

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recapture years of depreciation and stack it o

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I'm still doing fine even after the depreciation recapture tax i'm hit with after a sale. Eschewing depreciation is a huge mistake. Don't try to scare people away because of this. They can do it. there are 1031 exchanges as well which benefit if used. These guys may never sell. They may be strict buy and hold investors for just the cash flow.

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Long term real returns in the US favor equities over RE, with a lot less hassle.

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really? well so far my RE returns are blowing my dividend paying stock returns out the water. Maybe what's a hassle for you isn't for me? So you telling me you would prefer a dividend paying stock paying 4% versus what i laid out earlier? with 20k invested into each? really? That makes absolutely zero sense. ZERO! That's one of the theoretical points i was making to the OP. as a matter of fact my cashflow return rate is maybe better than his possible capital gains as well.

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I can live off the income stream from my investment portfolio, RE and passive partnership income add a nice cushion too.

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great. I'm so happy for you! I'm happy for any investors who can succeed through a myriad of investment vehicles. My 401k is ok, my roth ira is doing fantastic, my private lending was alright, tax liens were ok, and commodities in the past were ok, and my stocks are ok. But guess what? none offer the passive cashflow like RE! NONE! ZERO! NADA! based on same amount invested. Now a nice cash flowing BUSINESS CAN/WILL BEAT RE. But that wasn't his question. He basically posed the question, RE versus stock market which in turn makes most think he is looking strictly at the passive cashflow of each versus one another. I'll take RE all day and twice on sunday.

Again, maybe I should've worded the question differently, maybe what I should've said was, "can you make ALMOST as much money in the stock market, but with A LOT less headache than real estate....."

I somewhat disagree. I think investing in real estate is idiot proof. The math is basic. You have a checklist of things to follow and if you check everything off, your returns can be astronomically higher than the stock market.

Exhibit A. : My current project is a four bedroom house in fair condition. I purchased it for $18,000. I'll be putting about $5,000 into it and renting it for $700 a month (already have tenant waiting).

I didn't even have to look hard for this deal. It was on the MLS. $23,000 purchase for a $35,000 asset. When repairs are done, it will be generating a gross revenue stream of $8,400 per year.

Not a hypothetical....this is reality. I plan on doing 20 more just like it.