Why Should You Invest In Real Estate Over The Stock Market?

With the increasing level of complexity in the investment market, there are various options that investors have to choose from. Mutual funds, crypto, currencies, and NFTs are some of the common options that have made individuals and households millionaires.

However, despite the new, modern options emerging today, millions of investors find themselves returning to the two most popular options– real estate and stocks.

The choice between these two can be a daunting one to make, but the team from Five Star Property Management has you covered! In this article, we will describe the advantages that real estate has over the stock market. 


A Steady Flow Of Cash 

A rental property has the potential to offer a steady flow of income every month for several years. This is provided that the property is managed well and the residents’ needs are taken care of. This doesn’t apply only to residential options but also commercial, industrial, and hospitality investments. 

However, not every investment will yield similar results. For example, should you choose to buy an off-plan development, you will have to wait a few months or years for the unit to be finished for you to rent it out. 

The stock market doesn’t offer such predictable profits. You might argue that there are dividends that one receives every month, quarter, or on an annual basis, but while that might be true, real estate offers a more steady flow compared to that of stocks. 


A selection of rolled-up American bills.


Outsourcing Management 

Property management is no easy task, especially if you choose the self-management route. You will be expected to market the property, screen applicants, fill in vacancies, and also comply with the applicable laws of the land.

However, you can choose to outsource the management of your property to an experienced and expert service provider. While you may part with a management fee, you will be able to save yourself the stress of handling many property issues. 

The stock market is equally technical and will need you to absorb a lot of information to take advantage of the market. You can choose to employ a manager to handle your trading for a fee, however, this fee is significantly higher compared to that of property management. 

In addition, you can use the steady flow of cash from a property to pay for management fees. The opposite can’t always be said.


Degree of Volatility 

The reason why one chooses to invest is to get some extra income and protect oneself from the volatility of the economy. All investors wish for an asset that increases their purchasing power over the years in tandem with inflation. 

Property is just the asset; it emulates this perfectly. Real estate has appreciated over the years. It is one of the few assets whose value has kept up with the increase in the cost of living. Appreciation is not a given phenomenon for every neighborhood; this is something that every property owner should be aware of. 


Rows of miniature houses


On the contrary, the stock market is known for its volatility. There are several well-documented episodes in recent history where people have lost or won it big thanks to the volatility of stocks. It can be quite nerve-wracking especially, especially for those who value predictability in their finances. 


Tax Benefits

Should you choose to invest in rental properties, you can remove the maintenance costs, interest, and depreciation from your taxable income. This significantly reduces the amount of tax to be paid monthly.

Stocks, on the other hand, don’t give you such a level of tax deductions. From our research and experience, you are only eligible for tax deductions when the stocks are transacted for charitable donations & retirement account contributions. 


Deferment of Capital Gains Tax 

One of the major taxes that you will be required to pay when transacting property is the Capital Gains Tax. This is often paid by the vendor. They will pay a percentage of the profit that they have made as a result of the transaction.

But this tax can be offset by using the 1031 exchange. Provided for by the IRS Code, this is the process of exchanging like-for-like investment property. During such a transaction, you will not pay the CGT tax. 

You will be required to pay a percentage of your earnings when selling stocks. And since they are not like-for-like, stocks don’t match the criteria for a 1031 exchange. 


Several large binders full of paper.


In Conclusion 

Despite its immovability, real estate is one of the most stable investment options that you can add to your portfolio. It also promises you consistent rental income, appreciation, and will serve as a protector against economic downturns. 

Are you looking to invest in Pocatello? There is only one company you can trust to offer you current market updates, advise you on the best property to choose, and manage your property issues comprehensively. 

Five Star Property Management is a leading service provider managing a diverse portfolio of HOAs, apartments, condos, single-family properties, and townhouses. Our company has the experience and expertise to handle any property issue that may arise. 

Contact us today!

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