Real Estate Investing is Better Than The Stock Market
Why I Like Real Estate Over The Stock Market
Years back I would get sales calls from stock brokers in New York and other areas, soliciting my business and recommending stocks to buy in the hopes of making a commission. I own very few stocks now, but I’m always interested in learning new things. I’d listen to what they had to say. I consider real estate investing better than stocks due to several factors. The last broker call I remember was different than others. It gave me the opportunity to express my opinion about real estate investing versus the stock market.
“Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway”
After reading a quote from Warren Buffet, I was compelled to write about it. He said, “Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those who take the subway”. It’s funny because when I get the calls from those stock brokers, I think to myself, “I don’t know this guy on the phone from some regular Joe on the street. Why should I trust what this guy says?” These guys use hard-selling techniques. If they make enough phone calls, eventually they get someone to purchase a stock and make their commission.
The last guy that called was following up on a previous call. He continued with his persuasion techniques, until I told him about my real estate investing activities. I told him most of my money is in real estate investments, because I control the investment. I don’t have to worry about external forces affecting the performance of my apartments. If a mistake is made, I have only myself to blame and can make the necessary corrections immediately. There’s no worries about political disputes in government over budgets, shutdowns, policies or elections. I don’t worry when the Federal Reserve changes interest rates because my financing is locked-in and there’s no effect on rents and income. There’s no affect from economic fluctuations or global players that affect the markets or sentiment from other stock market participants. I don’t have to worry about rumors affecting stock prices or high-frequency computer trades causing automated sell-offs. In essence I don’t have to worry about outside forces out of my control affecting the performance of my investment.
“I can calculate the movement of the stars, but not the madness of men”
Sir Isaac Newton
The most important reason real estate investing is better than the stock market is because I provide a basic human necessity – shelter. As long as people need a place to live and roof over their heads, there will always be renters to rent my units. As long as I provide clean, safe, habitable housing, I don’t worry about slum lords, because their tenants wind up being my tenants. If similar competition becomes an issue, than it’s up to me to adjust my rents, provide better amenities or figure a creative solution. As long as I have control, I don’t have to worry about outside forces affecting my operations. This brings up another great quote by Sir Isaac Newton after losing money in the South Sea Bubble, “I can calculate the movement of the stars, but not the madness of men.”
Another reason real estate is a superior investment is that I can get a loan from my banker to help me purchase real estate. Banks aren’t going to loan money on stocks. That alone says a lot about the preference for real estate. I can get insurance on my apartments in case of damage. I don’t know of anyone that will give you insurance if your stock loses value. There’s also tax benefits in the form of depreciation that gives me credit on my taxes.
The stock broker agreed with some of my points. He especially agreed about external forces affecting stock values. One stock I purchased because of advice from one of these phone calls was a good example. It was an oil energy company I researched. The stock was doing o.k. When OPEC (Organization of Petroleum Exporting Countries) decided to flood the world with oil to put oil fracking companies out of business, all energy stocks tumbled. No one expected this. The stock broker couldn’t really say much after my reasoning in favor of real estate. He actually agreed on some of my points. From the demoralized tone of his voice he knew that he wasn’t getting a sale. It was soon thereafter that our conversation ended; however, I forgot to tell him to lose my number.
Did we leave anything out? Leave A Comment Below…