Investment

Should you invest in real estate or in other types of investments such as the stock market?  Of course, stocks and real estate are hard to compare.  You might have some type of information about a particular stock that you feel might make an excellent investment for you.

In general, there are some things that we usually use to compare stocks and real estate.  Here are some examples:

Leverage:  Most improved real estate can be purchased with a small down payment.  The purchase of a $250,000 property might be made with just 10% ($25,000) down.  If the property increased in value by just 10%, you would have an increase in your equity of 100%.  If you made a cash purchase of $25,000 in stock, the same change in value would give you only a 10% increase.  

The Use of Money:  Suppose you own a property valued at $400,000 that is encumbered by just a $50,000 mortgage.  You can refinance the property and take out a great amount of cash - tax free.  If you had the same type of appreciation in a stock, you would have to sell it in order to get the use of the capital - a taxable event.  

Control of the Investment:  With the real estate investment, you make the decisions that might enhance the value.  You can improve or remodel the property, change the use, or make other changes.  With an investment in stock, all of the management decisions that might affect the value are out of your control.