When speaking with passive investors about participating in one of my syndication deals, I am often asked, “Is a multifamily investment better than buying stocks?” I’ll be honest: There is no easy answer to that question. Each investment vehicle has its pros and cons, and both can help build wealth over time. Frankly, it’s all about the individual investment.
I always like to share some information with potential investors on the advantages and downsides of each one. So here they are for you to consider. Let’s start with some background on real estate versus the stock market:
If you look at the historical investment in real estate, it has been an excellent hedge against inflation. Most everyone is familiar with real estate, unlike the learning curve involved in investing in stocks. Real estate is also tangible — you can look at it and visit your investment if you like. Moreover, you can reinvest your return by either paying down the mortgage or by buying additional properties. It’s all about cash flow and the options that it provides.
When it comes to investing in the stock market, you could go back in time over 100 years and despite the crashes, corrections and the ups and downs of the market, buying stocks and reinvesting the dividends is one of the ways to build wealth. On the other side, stock prices and values can fluctuate wildly. Also, most investors use dividends as income rather than reinvesting them, diminishing their overall return.
Continue to read on: Forbes