Monday, April 2, 2007
Investing in Stocks vs. Real Estate
The topic of investing in stocks vs. real estate has started to come up recently on some investing forums and I just wanted to put in my 2-cents on the issue. I don’t think you can make a blanket statement that either stock or real estate investing is superior to the other. I think the success of either type of investing depends on the strategy and due diligence of the individual investor. I know a real estate investor who has been “flipping” houses part-time for 2 decades. Her and her husband successfully and consistently make money on real estate regardless of the macro trend of real estate. They are successful because they actively follow the market and buy “undervalued” houses based on current market conditions and fix/renovate and sell at a profit (usually within 3 months). I on the other hand don’t have their acumen and interest in real estate and as a result don’t put any of my investment capital into physical real estate (other than my primary residence). However, I do have an interest, background, and long term conservative strategy that I’m pursuing with equities. So which strategy is better? I think the answer is obvious: real estate is better for those with a strategy and passion for real estate while stocks are better for those with a strategy and passion for securities. The most important thing is not stocks vs. real estate it’s doing your due diligence and having a realistic, well researched investing strategy that you’re willing to stick with through thick and thin.