Many so called “financial experts” will tell you to save your money, invest it in the stock market and don`t touch it until you are retired. They often say you need to diversify your investments and make sure you save as much money as possible. Here at PE Properties we believe in real estate investing over the stock market for a number of reasons.

You can`t touch stocks: This may sound funny but I prefer to invest my money into tangible things. When you invest in the stock market you are leaving your money in the hands of greedy brokers and bankers instead of controlling it yourself. When I purchase a house I know that asset is something I can touch and will be worth something as long as it's still standing. As a matter of fact, even if the house burns to the ground the land will still be worth something. The way I look at it, in today’s economy, even the biggest businesses are susceptible to failure and I don't want to be on the wrong side of a bankruptcy.

Everyone will always need a place to live: When Blockbuster Video started their business I would guess they never expected us to be watching movies on our tablets streamed directly from the internet. I bet people that were heavily invested in Blockbuster when Netflix was created were pretty upset. I never worry about my real estate holdings because I know that I could always find another person that needs to rent a home.

You can still diversify: A pretty popular argument for stocks is that you can easily diversify your investments to make it a safer play. I would argue that being diverse in real estate is just as easy. Not everyone needs to buy rental properties and become a landlord to invest in real estate. There are people that make 10-20% returns lending other real estate investors money while the capital is tied to some sort of collateral such as a property or equity. You can also invest in notes, fix and flips, short term rentals, etc.

Assets Vs. Liabilities: This is a very popular argument among investors. Many people say buying a house to live in is an asset, but others would disagree with this statement. An asset, by definition, is something that puts money into your pocket. On the contrary, A liability is something that costs you money. If you broadly look at these definitions your primary residence is actually a liability. The way I look at it is your primary residence can be both if you use it correctly. If you have read through our website you can see we have talked about using a home equity line of credit (HELOC) to purchase real estate deals at a fairly low interest rate. In my opinion, if you take the equity from your house and get a HELOC to purchase deals, your primary residence just switched from a liability to an asset since that new property is hopefully putting money in your pocket.

Survive the crash: Market crashes can be a very scary time for investors. If the stock market crashes you have nothing tangible to hold onto, you just go on your Etrade app and see that your money has disappeared. With real estate there are many strategies that will help you capitalize during a crash. I want to start with the time leading up to the crash. In my opinion, hoarding money and opening lines of credits such as HELOCs and business credit cards with low interest is the first step to surviving the crash. When the crash happens it will be hard to get loans but houses will be extremely cheap. Having excess cash or credit during this time can be crucial in getting into a great deal. Also, having your current rental properties stabilized and financed on long term loans can be the next strategy. If you have an adjustable rate mortgage (ARM) during a crash this can be problematic when home values are low and your loan is coming to an end. On a positive note, when you own rental properties during a crash you can count on an influx of potential tenants. Often time during a crash, many people foreclose on their homes and need a place to live. This can be a great time for tenant acquisition.

These are a few of the reasons we prefer investing in real estate over the stock market. I want to add that plenty of people are successful in the stock market but investing in real estate is our means for gaining wealth through passive income. To find out more please send us an email or set up a phone consultation!

-Ryan Greenberg