Top Reasons To Invest In Real Estate Vs Stocks

Top Reasons To Invest In Real Estate Vs Stocks

With the markets in constant turmoil and the rise of cryptocurrency, it’s now more important than ever to be savvy about what you invest in.

Yes, there are risks with any kind of investment, including that of real estate, but whatever happens, it is likely to be profitable on the whole, and is generally considered one of the more low risk things to invest in.

That’s why we’re looking at the top reasons to invest in real estate vs stocks today. 

In this article, we’re going to go over this in more detail, and also share with you some of the many reasons why people like to invest in real estate, with particular emphasis on how it compares to investment in stocks and shares and the like.

By the end of the article at the wrap up, you will have food for thought, and you may even have made the decision to invest your money in real estate.

What's Ahead...

Quality Real Estate Generally Appreciates In Value Over Time

In a world with an ever-growing population and ever-growing economy, there should always be calls for land, housing, and commercial properties, and thus real estate is always sought after for one reason or another.

And that’s not all. Properties tend to become even more valuable over time due to an array of different factors, including through hands-off means, such as the gentrification of the neighborhood.

As more business and amenities are brought into the area, properties in the area naturally increase in value.

Real Estate Investment Is Easier To Predict Than Stock Value And Is Thus Considered A Safer Bet

As a general rule, you can know what to expect with real estate investment and housing compared to investing in the stock market. And there are a number of reasons for this…

The first is the volatility of the stock market, which is particularly sensitive to the economic market conditions and the supply and consumer demand for the goods and services being invested in.

Whereas, people will always need housing and business premises, so the demand for land and property is much more stable and predictable.

What’s more, real estate, unlike stocks, has tangible value. And this makes it much easier to value than stocks, whose intangible assets can often have somewhat arbitrary valuations.

In contrast, real estate value is remarkably easy to value, because it can be compared with similar properties in the same area, and the overall condition of the property is easy to assess.

You can use assessor estimates to get a good ballpark figure for the property, or use dedicated online calculators (or both).

These factors together make real estate investment easier to predict over time, and this often gives people more confidence in their investment.

Real Estate Offers Long-Term Returns vs. One Time Payouts

When investing in stocks and shares, people are usually looking for a one-time cash payment at some point in the future, which of course can be seen as beneficial in many circumstances.

However, if you were to invest in property which you then rent out, whether it’s for housing or commercial purposes, you can benefit from regular, consistent cash flow and long term returns.

Real Estate Cash Flow Creates Immediate Income

If the property/s you invest in are in good condition, and there is sufficient demand in the area to rent the property, then, once you have prepared the property for its purpose, you can start to make money with immediate effect.

This is in contrast to investment in stocks and shares, where investors tend to wait for years or even decades before they finally receive their cash payout.

Real Estate Investment Can Provide Regular Passive Income And Steady Cash Flow And Frequent Payouts

OK, so renting out properties is not completely passive, because you will need to ensure that the proper maintenance is carried out when required. However, on the whole, if the properties you own are in very good condition, then this maintenance should be minimal.

What’s more, renting out property for either housing or commercial purposes means that you will receive a steady and predictable income every month, creating excellent cash flow for you, which you can also choose to invest with if you so wish. 

This contrasts greatly with investment in company stocks. Most stockholders will typically wait out for a large cash payout in the distant future.

And while it may be possible for them to instead receive a number of smaller payouts over time, this will not typically be on a monthly basis, and annual payouts more common.

Chance To Build Capital: You Can Add Value To Real Estate

Top Reasons To Invest In Real Estate Vs Stocks

With investment in stocks and shares, there’s actually very little you can do to boost the value of your investment, unless you happen to have a key role within the companies you invest in, whether as a director, employee, or on the board.

However, when it comes to investing in real estate, you can take action to boost the value of your investment by doing such things as carrying out repairs and upgrading the property.

Or you could even boost your real estate investment income through continually flipping properties. You can buy one or more cheaper properties, make them a more attractive property, and sell them on for quite a profit.

There Are Tax Advantages To Real Estate Investment

You may also be interested to learn that real estate investment comes with a host of tax advantages. You can deduct many of the expenses associated with owning a property, and they are as follows:

  • Money for marketing the property to potential renters
  • The cost of repairs
  • The cost of any ongoing maintenance
  • Property insurance
  • Property management fees
  • Property taxes
  • Mortgage interest.

And that’s not all. If, as intended, you manage to sell the real estate for more than you initially paid for it, then there are tax advantages at this juncture as well.

The profit will not be taxed as income, but is instead taxed as capital gains, which usually comes with lower tax rates than income tax does.

In contrast, when it comes to investments in stocks and shares, the tax rate that you pay on dividends that exceed your allowance depends entirely on your income tax band.

And in addition, even stocks and shares ISAs are not entirely tax-free.

Real Estate VS Stocks – Final Thoughts

Now, we’re not saying that you should necessarily sell your stocks and switch over solely to real estate investment instead, but you could consider adding real estate investment to your investment portfolio.

This way, you can diversify your portfolio. And even during an economic downturn, your real estate investment might still be increasing in value.

Now that you know a little more about why many people prefer to invest in real estate as opposed to stocks, you may now be in a position to judge whether investment in real estate would feel like a worthy option for you.

However, despite the many reasons to invest in real estate that we have gone through in this article, I would still recommend that you do your homework beforehand, and take your time learning about real estate investing here using the many articles on this website, before parting with any of your money.

Frequently Asked Questions

When It Comes To Stock Vs. Real Estate, Which One Performs Better?

Investing in stock and investing in real estate are two very different things.

Due to this, it is tricky to compare the two. The stock market tends to be more volatile than the real estate market, and this makes real estate the safer investment. In terms of performance, the stock market has performed better than the real estate market.

However, as it is more volatile than the real estate market, you also stand to lose more from the stock market too. 

Are there Tax Advantages to Real Estate Investment?

Yes, there are tax advantages to real estate investment. When you invest in real estate, you can deduct a number of expenses associated with this investment.

Some of the things you can deduct from your taxes include: Money for marketing the property to potential renters, the cost of repairs, the cost of any ongoing maintenance, and property insurance.

Is Real Estate Investment Worth It?

Yes, most of the time real estate investment is worth it. There are tons of different benefits of real estate investment, and the biggest one is that it is a great way of generating passive income.

Paul Martinez

Paul Martinez is the founder of He is an expert in the areas of finance, real estate, and eCommerce.  Join him on to learn how to improve your financial life and excel in these areas. Before starting this blog, Paul built from scratch and managed two multi-million dollar companies. One in the real estate sector and one in the eCommerce sector.