If one is considering investing in real estate, then it is wise as compared to investing in stocks. Surprisingly in China, there is never any confusion over this subject. Hence it is the only reason why the Chinese are the biggest buyers of property all over the world. They buy properties in Australia, North America, Europe and they are very clear in the head as compared to others who grope in the dark. In the year twenty fifteen, there was a crash in the stock market in which billions of dollars of stocks were wiped away. They have learned their lesson, and now it is your turn.
What are the positive and negatives of investing in real es
tate? The positive includes depreciation, tax deductions, or one can sell the assets through an exchange known as 1031 exchange. Also one will not have to pay gains tax provided one invests the money in some other property. The negatives include the investment is illiquid which means when one invests in a property then he or she cannot sell it right away. Also when closing the sale one will have to pay taxes, commissions, and fees which could add up to a few thousand dollars. Also, real estate prices have a tendency to fluctuate.
Real estate investment is much safer than investing in stocks because of the following reasons.
- When one has stocks, and they pay dividends four per cent annually seems better than putting in the bank that gives one about one percent, but this is only after inflation. So one will not make much money unless the stock is sold out. In the case of real estate, one can rent it out and earn instant cash flow from five per cent to ten per cent of the price of the property. Also if one wants to sell the property then one can earn more than that.
- There is one drawback regarding stock market investment and that it is open, and nothing hidden. It is but natural that any company listed will have to give information on its finances to those who ask for it. On the other hand, one will have access to information about the property in your area that nobody else knows. So if one has a property on a public island one will know about the specific details of the market and it will be known to only a few people who could be interested. In this way, one can select the exact price to be sold at as per the market and to the right buyer.
- It is always easier to value property than stocks. One can always ask a trusted estate agent to assess the property to get an exact estimate from them. In the case of stocks, the price changes every day and every minute. There is no sure way that one is paying too much for a stock. After all, it is not easy to evaluate the stocks that belong to a company that is worth billions of dollars.