Why Investing in Real Estate is Better Than the Stock Market

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Buying real estate as an investment isn’t perfect for everyone. Some people would prefer to invest in paper assets like the stock market because they don’t have the time or patience to find rock-solid real estate deals.

But is this really the best way for them to invest their money?

Real estate investing provides an opportunity to earn money in a number of different ways including property appreciation, rental income, flipping properties, and it even provides homeowners with certain tax advantages.

On the other hand, investing in stocks could potentially mean paying bigger money in taxes. If you were to hold one of your positions for less than a year, you’d have to pay taxes at your regular income tax rate. Your tax obligations only become cheaper when you hold stocks for one year or more as a long-term investor.

All in all, investing in real estate definitely has huge advantages. We’d like to tell you about our reasons for feeling that real estate investing is far superior than investing in the stock market, so stick around to find out.

1. It’s Easy to Buy Low and Sell High in Real Estate

Stock market experts are constantly telling investors to buy low and sell high. But how often does that really work out? It’s nearly impossible to time the stock market perfectly and many investors unintentionally buy stocks when they are at their highest prices, only to watch them come plummeting down not long after their purchase.

In the real estate game, determining the value of a property depends on the size, location, best features, neighbourhood, and other particular criteria. The market is far from set in stone, and the fiscal criteria you were relying on initially may change by the time you’re able to secure a mortgage preapproval. However, it’s definitely a heck of a lot more stable than the stock market that seems to crash every 10 years or so.  

Finding undervalued real estate is much easier than timing the stock market. Property owners often need to bail out of their property investments quickly, so avid investors paying attention can scoop up these properties for well below market value.

The real estate market has stabilized since the crash in 2008. In fact, many strategic investors bought foreclosed properties for dirt-cheap, fixed them up, and flipped them a few years later as the market began to rebound.

As you can see, it’s way easier to buy low and sell high in the real estate game. Consider investing in real estate instead of dumping all of your money in a shaky and unstable stock market.

2. Real Estate Investment Returns Are Often Better Than Stock Market Returns

Anyone paying attention for the last 10 years sees how quickly the stock market can swing from one direction to the other. At one moment, the bulls are riding high, the economy seems stable, and stock prices are going through the roof. A minute later, the bears step in, the sky seems to be falling and panic sets in, the market is on the verge of collapse and stocks plummet in value.

Guess what? Stock market gains seem to happen slowly and consistently. Stock market losses – at least the big ones based on selling because of fear – can happen so fast that you barely realize you’ve lost a huge chunk of your retirement income or personal wealth.

On the flipside, emotional buying and selling never happens in the real estate market. And it’s impossible for panic selling to ever rear its ugly head because the investment is much less liquid and a lot more expensive in many cases.

Plus, when you invest in real estate you have many facts and a lot of information on your side. You can learn about the neighbourhood, the values of similar properties in the area, and much more. You can use this information to choose the perfect property to meet your investment criteria, all the while gaining additional income due to inflation, rising property prices, and higher rental income.

3. Achieve Unique Tax Advantages through Real Estate Investing

Real estate is considered a depreciating asset, which means property owners get to use depreciation as a tax advantage. You can deduct the cost of your property over a period of 27.5 years.

Depreciation also works as a tax credit. This is an additional tax credit on top of other expenses like property upkeep, maintenance, and other related expenses. So ultimately this additional tax advantage will lower your overall tax liability and put more money in your pocket at the end of the year.

Final Thoughts

We’ve barely scratched the surface discussing why real estate is a better investment than buying stocks. But as you can see, the information shared today should provide plenty of reasons why you might want to change your tune and consider investing in real estate as opposed to the volatile stock market.


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