Real Estate Vs. Stocks – The Other Side Of The Story Every Real Estate Investor Needs To Know

The Wall Street or Main Street (real estate) debate is well covered territory by both the print and TV media outlets and perhaps was a topic of discussion at a recent cocktail party, wedding reception or real estate investment social event you attended.

Given the recent run up in the stock market (3Q07), the increase in interest rates, the limitations being put on non-owner occupied financing and the flattening or depreciating property value issue plaguing some of the country’s real estate markets, what is the better investment (from a return on investment standpoint) for both the short and long term, based upon today’s market?

If you are one to believe what you hear and or read (and it isn’t your fault if you do—a lot of money is spent to program your perception and belief systems) then you believe Wall Street is the better investment vehicle.

Discussions like these and comparisons of ROI (return on investment) between Wall Street and Main Street rarely account for and ignore the following:

1). The concept of leveraged capital: Up to recently, you could control a hard asset (real estate) with no money down—this can’t be replicated on Wall Street…Even now, you can control a 100K real estate investment for between 5-10K—even if you were to use stock options, you still can’t leverage yourself with OPM the way you can with real estate.

2) The benefits of tax deductibility: Real estate is the only investment that allows for a tax deduction when purchasing, owning/controlling and selling real estate—not so with Wall Street.

3) Differing ways to profit: Wall Street offers only two ways to profit from the stock market—capital appreciation and dividend payouts. On the other hand, investment real estate offers at least 8 ways to profit:

– Rent roll (rental income)

– Mortgage Payoff (thanks to your tenants)

– Property Improvement

– Purchase Profits (buying at a discount)

– Government Benefits (tax credits, tax deductions, rent vouchers, etc.)

– Strategic Property Management

– Property Appreciation

– Inflation

4) The concept of leveraged equity (profits): This is where the divide between Wall Street and Main Street widens. Let’s compare a $10,000 investment made by two investors (one invests in Wall Street and the other invests in Main Street) to better illustrate the profound profit differences: ·

Investor Y invests $10,000 into Wall Street for an annual return of 6%. ·

Investor X invests $10,000 (5,000 towards a down payment and 5,000 towards closing costs) to purchase a real estate investment worth $100,000 which appreciates 6% annually.

Here is how the two investment approaches differ:

a. In the 3rd year, Investor Y has a capital appreciation value of approx. $1,900—Investor X has an equity appreciation value that is more then 1000% higher (approx. $19,102).

b. In the 5th year, Investor Y has a capital appreciation value of $3,382—Investor X has an equity appreciation value has multiplied tenfold ($33,382).

c. At the end of 10 years, Investor Y has approx. $7,900 in profits—Investor X has more then $79,805.

d. At the end of 20 years, Investor Y has more then doubled his original investment (with profits exceeding $22,000)—so has Investor X, who has earned approximately 2200% on his original $10,000 investment (accumulating more then $220,714in equity).

Additional arguments could be made about the speculative nature of Wall Street or the volatility of the stock market & the differences between a hard asset and a paper one, but remember this:

– Everybody needs somewhere to live—you can’t live in a mutual fund…Real estate will always be in demand regardless of the market circumstances…(This is the “demand” side of the law of supply and demand)

– God stop making land on the 7th day (unless you live near a volcano)—you can’t build a house on top of your IRA…Real Estate will benefit from diminished availability (supply) as our population continues to expand due to natural reproduction and immigrant influx…(This is the “supply” side of the law of supply and demand)

How to Get Your Home Sold in the Sarasota Real Estate Market

If you want to sell your home in Sarasota real estate quickly and effectively, it is not time for you to do it alone. You have to make sure that your home for sale gain the maximum exposure needed in order to market your home.

You need to gain the marketing strategy that can aid you to sell your home quickly and working with a real estate agent is the best way to do it. When you work with a real estate agent, your home for sale will be listed on a MLS database that other real estate agents can access. More so, working with real estate agent can help you gain the benefit of an experienced marketer and negotiator who is very much familiar with the real estate issues in Sarasota real estate.

When you select someone to represent you and assist you with your real estate quest, you need to interview about 3 real estate agents who are familiar with Sarasota real estate market. You need to allocate time to ask several questions such as: What strategy/strategies the agent will do to market your home? What is the price that buyers can get for your home? The real estate agents should provide you with their marketing analysis and provide you with the lists of sellers that they worked with which you can use as references.

You should price your home for sale rightly. You should know the real value of your home. Actually, with the help of your real estate agent, you will know the real value of your home. Do not overprice your home; you will just chase potential buyers away. Yes, it is a reality that overpricing can make potentials buyers move away and look for other home. So make sure to price your home right!

You have to get your home in show-condition. You have to make sure that your home is in good shape before potential buyers view it. You have to bear in mind that you only have one chance to make a good impression, so make the most out of it. Remove clutter. Clean up the entire house. Touch up the paint where it is needed. Clean the carpet. Make repairs, if necessary.

Do not fail to notice the outside of your home. Bear in mind that this is the first part that buyers will see, so make sure that it is appealing and clean enough to make buyers interested to view your home. Trim the lawn. Rake the leaves. Remove the clutter such as your kitchen tools and toys of your kids.

Take note that a clean home can make buyers be interested to view your home. This can give buyers the interest to view your home. The main goal here is to sell your home right, clean home is one of the huge factors that can make buyers be interested with your home.

If in case, there are competing homes for sale in your neighborhood in Sarasota real estate, do not be discourage. Building the right moves in your home selling process can help you out in today’s competitive market.

Eliza Maledevic Ayson