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Real Estate Vs. Wall Street

By Brian Kline | February 5, 2014

Wall Street is at it again. Out to strip away the retirement and investing wealth of millions of Americans. Yesterday's Fox News headline read "The Wall Street Winter of Discontent". The current prediction is that the major stock declines for January will continue for the foreseeable future. The Dow average lost more than 5% of its value the first month of this year and continues tumbling.


photo credit: nromagna via photopin cc

In contrast, real estate prices in December increased 2.5% year on year. Regionally, the Midwest showed the highest increase at 6.9%. Home sales are also increasing with a 6.8% increase in December sale. Continuing increases in sales indicates the market will remain active going forward. All the numbers say that real estate will easily out perform Wall Street in 2014.

Control and Return

Unless you are an insider trader, investing in stocks is a game of roulette that you will eventually lose at. If you are an insider, shame on you for taking advantage of other people. Eventually the SEC will come knocking on your door. There is no insider trading in real estate. You only gain an advantage by being an adamant student of the market you are investing in. By conservatively leveraging your money, you can easily earn a 20% annual return. On Wall Street, your return is completely unpredictable and completely in the hands of other people, be it analysts that predict the market, brokers that might be involved with inside trading that want to drive prices of a particular stock up or down, or CEOs of major companies that have their own agendas.

It might be over simplifying it but with Wall Street investing you are essentially limited to two methods of making money. Buying low and selling high or holding long term to collect miserly dividends. Real estate offers many different income streams, almost always more than one from a single property. The most common ways of making money from real estate are appreciation, flipping for a quick profit, tax benefits, and cash flow.

Real Estate is a Mom and Pop Business

Increasingly, average investors are becoming fed up with the ups but mostly downs of Wall Street investing and the less than inflation returns offered from CDs and savings accounts. Average investors wanting a decent return are moving into real estate. Constantly increasing rents are bringing in mom and pop investors that want to hold and rent the property for dependable cash flow. Others are being more aggressive buying, fixing, and flipping properties as they see values again dependably on the rise. Others are stepping in where the banks are failing homebuyers to make private loans that pay seven or eight times more than savings accounts.

Over that last year or so, big institutional investors have recognized the financial opportunities that real estate is offering. They've plowed more than 10 billion dollars into buying up large tracts of foreclosures. Should mom and pop investors fear these institutional investors will create a bubble and jump back out to leave small investors with a loss? Not at this time at least. Big investors have to play buy the same rules as the small guys in real estate. Small investors should watch the market carefully but historically real estate has always delivered a superior and more dependable return than Wall Street.


Brian KlineAbout the author: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News
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