STOCKS VS. REAL ESTATE: THE MYTHS, THE FACTS AND WHAT YOUR EXPECTATIONS SHOULD BE
In this blog post regarding property management, we are going to look at the fundamentals of investing in stock and real estate. After dissecting them separately we are going to look at the similarities, expectations and realities of the two.
Stocks. Buying shares of stock, is a fancy way of saying “you are buying a piece of a company”. That company sells a service/product and you are entitled to a cut of the profit, if any, for every share you own. If a company has 1,000,000 shares outstanding and you own 10,000 shares, you own 1% of the company. Everyone knows that the stocks go up and could have historic highs and on the other side, can have historic lows. When purchases stock, it is a given that they understand it is a risk and must be prepared for ups and downs.
Real estate. Purchasing real estate is straight forward in that, you buy a property, fix it and collect the rent checks right? I wish! On the contrary, there are expenses that occur ALL the time. You must plan ahead and save for repairs, upgrades and malfunctions of the property. There are NO surprises here. If you’re ever to the point where something catches you “off guard” then you weren’t prepared. There no such thing as an unplanned expense in real estate just like there is no such thing as an unplanned drop in the stock market. Whether you’re a seasoned investor or a first time real estate investor, don’t get caught with your pants down. I wrote an article a few months back that give you a good idea on what to save for and how much to save given the property you own.