Growing your wealth entails pursuing investment opportunities. In pursuit of building your portfolio, you might wonder whether you should invest your funds in the stock market or the real estate industry. But each type of investment provides different advantages. You’ll want to pick the one that draws you closer to meeting your financial goals.

Both can lead to increasing your wealth if you approach them correctly. As a new investor, it might be hard to make the right decision. But this article lists a variety of reasons why real estate investments should be considered over stocks. Read on to find out!

Real Estate Investments Offer the Potential to Earn a Steady Income

If you have a property situated in a strategic area, it can provide you with consistent income returns over a long period. Picking commercial properties as investments can be just as lucrative as residential units if you select the right location and assess your investment goals. The higher the demand in a specific location, the more earnings you can earn.

But note that real estate investments don’t pay back automatically in terms of profit. You need to take the time to obtain tenants and pay off any loans and fees associated with the initial purchase. Make sure you calculate those expenses when making the initial investment. 

a computer with stats and charts showing a person's earnings

Now when we take a look at stocks as investments, cash flow potential can be limiting. Earnings can be made only when selling off the stocks at a higher price and this can take years at times. While you can get regular monthly, quarterly, or yearly dividends from investing in the stock market, the disparity in amount, when compared to rental income earnings, is wide.

Hiring a Property Management Company is an Available Option

The extensive tasks of advertising a rental space, screening for prospective renters, collecting the rent, handling property repairs, and resolving tenant concerns, it can get overwhelming for landlords. The good news is engaging the services of a trusted property manager is always possible. 

Excellent property management companies help you meet your business goals and streamline your rental business operation. You can tap their expertise and resources to succeed in real estate and limit property vacancies thus maximizing your ROI. 

T-Square Properties is a trusted and committed property manager that helps property investors find suitable residents through effective marketing, detailed tenant screening, preventive maintenance, and prompt rent collection. 

For stock investments, you can also opt to hire a manager to oversee your stock portfolio but the fees can be higher when compared to property management charges. The low fees collected by property management companies can easily be gained back through steady returns of the rental due to excellent management.

person tracking their investments in the stock market

Stocks Can Be Very Volatile

It’s common knowledge that stocks can be volatile and can fluctuate rapidly in price in the short term. You might have paid $100 for a stock and the next moment, its value got reduced to $20. The reverse can also be true. 

But, regardless of the outcome, you’ll have little to no control over the value of your stock. It’s essential to choose the right stocks to avoid massive losses. It can be hard to depend on stocks for short-term investment due to their fluctuations. 

On the other hand, real estate can shield you from rising inflation. Even if the value of the dollar dwindles, your real estate investment can continue to appreciate which protects you from the expected risk of inflation. What’s more, there are steps you can take to positively impact the value of your property and your earnings. 

Real Estate Values can Appreciate After a Certain Period

Real estate investment can be advantageous since it can lead to property appreciation in the long term. Though a crisis occurs like a housing bubble, in the long run, property values will rise again so investing in real estate can be a great strategy.

Real estate investment can be dependable with its potential to greatly appreciate over time. Upgrading your real estate unit also enhances its value higher since it attracts new renters and inspires older tenants to renew the lease agreement. While you wait for the value to increase, you can rent out the property and collect passive income in the form of rental payments from tenants. 

tax forms with three cubes spelling the word tax on top

Real Estate Investments Come with Tax Deductions

The IRS offers tax-deductible expenses to rental owners which can include property taxes, property management fees, mortgage interest, and property maintenance and repair costs. But with stocks, tax deductions are only provided to charity-related donations or contributions to a retirement account.

Deferring Real Estate Capital Gains Tax is Allowed for Real Estate Investments

When selling your stocks, paying capital gains taxes comes with the territory. But with real estate, legal deferring of paying for capital gains taxes is allowed. A similar property can be bought after the sale, termed a 1031 Exchange where real estate investors can exchange one investment property for another to pay the tax at a later time. Stocks, bonds, and trust certificates don’t qualify for a 1031 Exchange.

Bottom Line

Stocks and real estate both offer advantages and disadvantages. From the reasons cited above, it’s easy to figure out which is the better type of investment in terms of providing great returns, reducing risk, and creating a diverse investment portfolio.

Though real estate investments require a lot of time and effort from property owners, investors also have the option to partner with reliable property management companies with solid industry experience.

We at T-Square Properties have a strong team of professionals fully committed to providing cost-effective and technology-aided property management services. You’ll have access to a team of dedicated professionals experienced in residential and commercial property management. Feel free to contact T-square Properties today to learn more about our services!


Disclaimer: This blog article is for informational purposes. The information contained in this blog article may not be the official policies of T-Square Properties.

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