Why real estate investment can be better than stocks and bonds

When looking for investment opportunities, many think stocks and bonds are the only way to make money. While these two vehicles offer serious benefits, the market is not the only way to invest. Some opt to buy houses and either fix them up and sell them or rent them out to people with a stable income. In fact, many find real estate investment to offer superior returns when compared to buying stocks and bonds. Here are four reasons why real estate can be a preferable option to equities.

Minimal investment: When buying a half million-dollar property, an investor can make a minimal down payment and still control a large asset. This is not the case when buying stocks or bonds, as an individual must have the money in his or her account. While a person can trade on margin, they cannot control hundreds of thousands of dollars with a small investment. Real estate is perfect for an investor getting started, as a small down payment and an excellent credit score are all one needs to see gains without having to use his or her own money.

Demand: When buying stock in a publicly traded company, one can see a nice short-term return. For example, businesses such as Apple and Google reward shareholders handsomely. However, for every large and successful corporation, there are dozens that never made it to the top. When buying a house, one will not risk such wild swings. Since people will always need a place to live, real estate and land should continue offering excellent short- and long-term returns for its investors.

Control: When investing in a stock or bond, an individual has little control over its performance and can only watch as the investment increases or decreases in value. When investing in real estate, a smart investor can take steps to improve his or her chances. When adding on a room or sprucing up a house or apartment, an investor will see greater returns in both rental rates and property value. Simply put, while an individual equities investor can’t impact his or her investment, a real estate buyer can make more money by trying harder.

Tax implications: When profiting off bond or stock trades, the investor will have to pay taxes. While not high, they do hurt the overall return on investment. Now, a property owner must pay taxes, but when fixing up a place, one can decrease the burden by writing off the costs. This is an often-overlooked advantage for a real estate investor.