Volatility is actually an advantage of stocks over real estate. When markets decline, you can effectively buy back time when prices go down and widen your margin of return. Real estate continues to appreciate so you are constantly having to buy in at a higher price. Not to mention time is always escaping you while you struggle to save for a downpayment or work your way up the income ladder. With volatility comes opportunity
Real estate can be a lucrative investment in certain areas, but its returns can also barely match a well-diversified index fund like the S&P 500. One growing concern is the trend of treating real estate as a purely speculative commodity. This focus on short-term gains, coupled with rising interest rates and exorbitant homeowner's insurance costs in states like California and Florida, raises questions about the future of real estate's historical high returns. When you factor in the ongoing costs of property taxes, insurance, and maintenance, achieving significant profits becomes even more challenging. In essence, real estate may require a more cautious and long-term approach compared to the past.
This is actually super informative and a good versus. I ultimately want to be invested in both, but here in NJ it’s very hard to break into real estate after the pandemic tax as I like to call it 😅. So until I’m ready stocks have been my only option.
I have invested in stocks for 24 years and rental properties for 20 years. I now have 2/3rds of my net worth in RE mostly because of peace of mind (less volatility and more cash flow) and 1/3rd in stocks because of the high rate of return on liquidity and diversification. I am teaching my teenage kids everything I know starting with investing their side hustle income in stocks because of the lower barrier to entry.
@@SkyOceanBleu Before taxes stocks, after tax benefits real estate. But having both is great because each year is different and together they reduce variance in the combined net worth growth.
Super well done, guys! Very thoughtful. I loved learning the statistics that Scott shared regarding the LEVERAGED return of real estate being up to 17% on average, and understanding that that number continues to lower all the way until you’ve paid off the property completely.
I started out in real estate. I had properties in 3 states at one point. The argument that "Real estate returns are lower than stocks" is only true if you don't take into account rents and leverage. With those two, real estate could return more than stocks. I had unlimited returns in some of them in some year. But then you have property managers stealing money, now it's just a guessing game. You could easily go from unlimited returns to red in a blink on an eye. Then you have the headache of dealing with all that issue, the city code compliance dept, licenses if applicable, taxes is you DIY. So, stocks win for me!
Being a landlord requires some of your time sure but so does working a job for 20-40 years because you have to wait to built Up index funds to get out of a w-2
While real estate can be a lucrative investment, it requires significant capital, extensive knowledge, and a fair amount of luck to be successful. Challenges include: Rising Home Insurance Rates: Securing affordable home insurance can be difficult in some areas, adding to the ongoing costs. Tenant Risks: Dealing with bad tenants, vacancies, and potential property damage can significantly impact your cash flow. Limited Geographical Reach: Real estate investment is often tied to a specific location, limiting diversification and potentially exposing you to local market fluctuations. Uncertain Appreciation: Past performance, particularly double-digit appreciation, is not a guarantee of future returns. The real estate market can be cyclical, and future appreciation may be more modest. At the beginning of my wealth-building journey, I feel more comfortable with stocks. Also, I feel like its less risker than real estate if I can only afford one right now.
@claudiovallone9217 thanks for the input. Not sure if you deal with areas where home insurers pulled out or they increased rates. How profitable is real estate in this new environment?
I am a real estate guy buy also have stocks... Right now it's 20% of my equity.. the reason I entered sticks is that millionaires are in real estate but billionaires own stocks...
The real value in investing in real estate vs stocks is taxes. You have lot of flexibility with real estate. If you take advantage of it, you can have more assets compared to investing in stocks.
@@janinesmith1595 most of the time you will pay tax but you can lower the tax rate most of the time and most of the time you will pay less on your gains then active income. It is a rare scenario in fairness but if you have the money to generate up to 47,025 in dividend income filing single you pay 0 in federal income tax you still have state tax but you could move to a tax free state to pay 0 on all your income and that goes up to 94,050 with no tax married filing jointly again that would have to be your only income from dividends but still a way to pay no tax legally that many people are unaware of! look up the dividend tax rate federally and you will see the info! Hope this helps!
@@janinesmith1595 it’s a rare scenario in fairness and you do need a big nest egg but if you have the money to generate up to 47,025 in just dividend income a year filing single you pay 0 federally you would still have state tax but you can move to a tax free state and pay 0 on all your income if you want! and it goes up to 94,050 married filling jointly many people are unaware of this! Look at the dividend tax rate and you will see what I mean Hope this helps!
Well as Scott said in the beginning it's good to have BOTH this non-sense debate Real Estate vs Stocks is bull crap. We should have both no matter what anyone says lol.
Both markets have become dominated by sociopaths with no sense of the human impact if their actions. Enjoy making money either way, and the karma of participating in bubble investments that send thousands of people into homelessness every month.
Volatility is actually an advantage of stocks over real estate. When markets decline, you can effectively buy back time when prices go down and widen your margin of return. Real estate continues to appreciate so you are constantly having to buy in at a higher price. Not to mention time is always escaping you while you struggle to save for a downpayment or work your way up the income ladder. With volatility comes opportunity
Real estate can be a lucrative investment in certain areas, but its returns can also barely match a well-diversified index fund like the S&P 500. One growing concern is the trend of treating real estate as a purely speculative commodity.
This focus on short-term gains, coupled with rising interest rates and exorbitant homeowner's insurance costs in states like California and Florida, raises questions about the future of real estate's historical high returns. When you factor in the ongoing costs of property taxes, insurance, and maintenance, achieving significant profits becomes even more challenging.
In essence, real estate may require a more cautious and long-term approach compared to the past.
This is actually super informative and a good versus. I ultimately want to be invested in both, but here in NJ it’s very hard to break into real estate after the pandemic tax as I like to call it 😅. So until I’m ready stocks have been my only option.
You could invest in remote markets with low median prices and high CoC. I live in the Bay Area but have rental properties as far away as Georgia.
I was waiting for this. Scott did not push back enough against the Reits guy. Let's see this one.
28:15 real estate has brought up tax advantages but there’s also ways to invest in stocks with tax advantages
I have invested in stocks for 24 years and rental properties for 20 years. I now have 2/3rds of my net worth in RE mostly because of peace of mind (less volatility and more cash flow) and 1/3rd in stocks because of the high rate of return on liquidity and diversification.
I am teaching my teenage kids everything I know starting with investing their side hustle income in stocks because of the lower barrier to entry.
Which one did you find to have produced a higher return for you?
@@SkyOceanBleu Before taxes stocks, after tax benefits real estate. But having both is great because each year is different and together they reduce variance in the combined net worth growth.
@@poonekar thanks for sharing!
Sure wish I was one of your teenage kids! Can you share your knowledge with me??
Super well done, guys! Very thoughtful. I loved learning the statistics that Scott shared regarding the LEVERAGED return of real estate being up to 17% on average, and understanding that that number continues to lower all the way until you’ve paid off the property completely.
I started out in real estate. I had properties in 3 states at one point. The argument that "Real estate returns are lower than stocks" is only true if you don't take into account rents and leverage. With those two, real estate could return more than stocks. I had unlimited returns in some of them in some year. But then you have property managers stealing money, now it's just a guessing game. You could easily go from unlimited returns to red in a blink on an eye. Then you have the headache of dealing with all that issue, the city code compliance dept, licenses if applicable, taxes is you DIY. So, stocks win for me!
Being a landlord requires some of your time sure but so does working a job for 20-40 years because you have to wait to built
Up index funds to get out of a w-2
This was a fantastic conversation. Thanks for the crossover and informative discussion/debate!
The problem imo when comparing is that one is passive and the other active. 2 different things
While real estate can be a lucrative investment, it requires significant capital, extensive knowledge, and a fair amount of luck to be successful. Challenges include:
Rising Home Insurance Rates: Securing affordable home insurance can be difficult in some areas, adding to the ongoing costs.
Tenant Risks: Dealing with bad tenants, vacancies, and potential property damage can significantly impact your cash flow.
Limited Geographical Reach: Real estate investment is often tied to a specific location, limiting diversification and potentially exposing you to local market fluctuations.
Uncertain Appreciation: Past performance, particularly double-digit appreciation, is not a guarantee of future returns. The real estate market can be cyclical, and future appreciation may be more modest.
At the beginning of my wealth-building journey, I feel more comfortable with stocks. Also, I feel like its less risker than real estate if I can only afford one right now.
@@tamwilfred i have experience with real estate and it is A LOT OF WORK. Cannot compare with stocks
@claudiovallone9217 thanks for the input. Not sure if you deal with areas where home insurers pulled out or they increased rates. How profitable is real estate in this new environment?
I've been a fan of BP since day one but this is a REALLY good episode here!
I am a real estate guy buy also have stocks... Right now it's 20% of my equity.. the reason I entered sticks is that millionaires are in real estate but billionaires own stocks...
Billionaires own companies.
@@peterparker2068 i like that
You should definitely prioritize one over another
The real value in investing in real estate vs stocks is taxes. You have lot of flexibility with real estate. If you take advantage of it, you can have more assets compared to investing in stocks.
100% of a stock portfolio could be tax-deferred or tax-exempt if you use IRAs for all of your equity investing.
I disagree there are ways to avoid or not pay any taxes on stock!
@@Da_manndomhow do you not pay taxes?
@@janinesmith1595 most of the time you will pay tax but you can lower the tax rate most of the time and most of the time you will pay less on your gains then active income. It is a rare scenario in fairness but if you have the money to generate up to 47,025 in dividend income filing single you pay 0 in federal income tax you still have state tax but you could move to a tax free state to pay 0 on all your income and that goes up to 94,050 with no tax married filing jointly again that would have to be your only income from dividends but still a way to pay no tax legally that many people are unaware of! look up the dividend tax rate federally and you will see the info! Hope this helps!
@@janinesmith1595 it’s a rare scenario in fairness and you do need a big nest egg but if you have the money to generate up to 47,025 in just dividend income a year filing single you pay 0 federally you would still have state tax but you can move to a tax free state and pay 0 on all your income if you want! and it goes up to 94,050 married filling jointly many people are unaware of this! Look at the dividend tax rate and you will see what I mean Hope this helps!
Well as Scott said in the beginning it's good to have BOTH this non-sense debate Real Estate vs Stocks is bull crap. We should have both no matter what anyone says lol.
So true 👍 ❤
Thank youverymuch. Very informative
Very nice comparing apples to oranges 😂😂😂
Too many bones, no blood
Stock market is the superior investment because it is zero work and zero risk. ❤
Zero risk???
Both markets have become dominated by sociopaths with no sense of the human impact if their actions. Enjoy making money either way, and the karma of participating in bubble investments that send thousands of people into homelessness every month.
Cuba anda perfecto con el socialismo no? 😂