{"id":1685,"date":"2007-07-23T08:48:07","date_gmt":"2007-07-23T15:48:07","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=1685"},"modified":"2007-07-23T08:48:07","modified_gmt":"2007-07-23T15:48:07","slug":"real-estate-investing-vs-stock-market-investing-is-there-a-clear-winner","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1685\/real-estate-investing-vs-stock-market-investing-is-there-a-clear-winner\/","title":{"rendered":"Real Estate Investing vs. Stock Market Investing- Is there a Clear Winner?"},"content":{"rendered":"

Real estate enthusiasts have been sounding their trumpet during the latest run in the real estate market. Many real estate focused investors truly believe real estate outperforms every other investment by a wide margin and even go as far as to wonder why investors would choose any other investment vehicle. Our own Jeff Brown<\/a> even took quite a swing at the stock market in his post, My 4% will Beat Your 10 Any Day — Stocks vs. Real Estate<\/a>. In the other corner stock market aficionados contend that in the long run stock market returns dominate. As an investor in both I am here to definitively say neither dominates.<\/p>\n

Starting with the facts: Long run real estate investment returns average about 3%. This is simply a year over year long run appreciation average (cnn.com report data), while the average long run stock market return hovers around 10%. It is important to note that anyone can point to specific year, or even five year, period that one asset class has outperformed the other. This is not relevant because long term investing is the focus of this discussion.<\/p>\n

Many stock market champions simply stop their analysis right there. That is wrong, plain and simple. Of course, as the analysis goes deeper, the water gets muddier and muddier. The starting point is leverage. Very few investors pay 100% of the purchase price when they buy an investment property. At most an investor will put the standard 20% down in a direct commercial real estate investment. This means that an investor could buy 5 times value of an investment. For example, if an investor has $100,000 to invest, they could buy $100,000 worth of stocks or $500,000 worth of real estate. Using some simple math, after 1 year the stocks would be worth $110,000, while the real estate investment would be worth $115,000 ($100,000 + $500,000 x .03).<\/p>\n

Unfortunately many real estate investors stop their analysis here. This is also incorrect. Not only is it unfair to compare a leveraged real estate investment to an investment in the stock market that is not leveraged, but there are a Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Real estate enthusiasts have been sounding their trumpet during the latest run in the real estate market. Many real estate focused investors truly believe real estate outperforms every other investment by a wide margin and even go as far as to wonder why investors would choose any other investment vehicle. Our own Jeff Brown even […]<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2,8,26,5],"tags":[],"class_list":{"0":"post-1685","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-general","7":"category-investment","8":"category-lending","9":"category-real-estate","11":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":1564,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1564\/the-real-risk-in-real-estate-flipping\/","url_meta":{"origin":1685,"position":0},"title":"The Real Risk in Real Estate Flipping","author":"Cooksquared","date":"June 22, 2007","format":false,"excerpt":"New investors rarely stop to address the subject of risk tolerance. People who have never done a single real estate deal see others making a lot of money in real estate and want to jump right in. They never stop to understand the true risks of real estate. Most investors\u2026","rel":"","context":"In "Blogging"","block_context":{"text":"Blogging","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blogging\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":16137,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16137\/where-is-the-real-estate-market-going-today\/","url_meta":{"origin":1685,"position":1},"title":"Where is the Real Estate Market Going Today???","author":"Cooksquared","date":"July 27, 2012","format":false,"excerpt":"If you are like me, you have a random sampling of news websites to keep you abreast of the happenings of the world every hour or so.\u00a0 It\u2019s the age we live in; every data point, story, press release, blog post triggers a monsoon of pundits and analytical analysis that\u2026","rel":"","context":"In "Innovation"","block_context":{"text":"Innovation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/innovation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3923,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3923\/what-went-wrong-in-the-real-estate-market-we-told-homeowners-to-treat-their-homes-like-securities-investments-and-they-did\/","url_meta":{"origin":1685,"position":2},"title":"What went wrong in the real estate market? We told homeowners to treat their homes like securities investments — and they did…","author":"Greg Swann","date":"August 16, 2008","format":false,"excerpt":"This is my column for this week from the Arizona Republic (permanent link). As a matter of eating crow, I will attest that I publicly denied that housing prices could ever behave like securities prices, falling far below their fundamental value. The market has proved me wrong. We're writing contracts\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1221,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1221\/the-carnival-of-real-estate-26\/","url_meta":{"origin":1685,"position":3},"title":"The Carnival of Real Estate . . .","author":"Greg Swann","date":"March 26, 2007","format":false,"excerpt":"...is at miOaklandCounty, Maureen Francis' weblog. Teri Lussier's introductory post came in fifth place,* not bad for a start. With his post Persistence: The Investors Greatest Tool, Michael Cook took top honors at The Carnival of Real Estate Investing, hosted this week by the Ral Estate Investing for Real Blog.\u2026","rel":"","context":"In "Blog Carnivals"","block_context":{"text":"Blog Carnivals","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/blog-carnivals\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":17003,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/17003\/a-note-to-our-rental-home-investors-influx-just-lacks-majesty-but-its-the-upside-of-an-exodus\/","url_meta":{"origin":1685,"position":4},"title":"A note to our rental-home investors: Influx just lacks majesty, but it\u2019s the upside of an exodus.","author":"Greg Swann","date":"September 13, 2020","format":false,"excerpt":"Me today to our buy-and-hold rental property investors: It's not well-reported, except in the form of secondary evidence like U-Haul rates and MLS listings and closings, but very-vertical cities are emptying themselves to the benefit of very-horizontal communities. 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