Some myths about Real Estate

By | September 30, 2019

If this is your first home then congratulations, it is sensible and probably the best decision of your lifetime. However, if you have bought a second home, a rental property or a vacation home, then this is a new game that you are playing. The truth is that if you look back at history then over a long period, the real return that the stocks have offered to investors were way above the returns that one made with real estate investment.

You do not just have to see how much the increase in the price of your real estate investments was. Many things go behind it. You have to calculate the number of years it took for the price to appreciate, the additional insurance and the extra costs that you spend on the Dallas real estate property. At times these outflows, when adjusted to the real estate gain, may not even be enough to beat inflation.

It is a fundamental thing that people should factor in when they are investing in the Dallas real estate market. Real estate in the way you keep the money to buy a property instead of paying rents. However, if you thought that it is a sure-shot way to generate high returns, then this does not seem right.

Real estate seems to be more tangible than the stock market

The retail investors do not look at the company shares as something that is a business which has employees, facilities and profits. Instead all that they see it as something that they buy and sell seeing the technical charts. For most of them, stocks market is a lottery ticket, and the investors are not aware that the price of the share is vital and that what they pay is the ultimate factor that will decide their return on investment. The average stock market investor does not see his stock portfolio as the owner, and all that they dream of is an up move in the stock prices on the next trading day.

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However, with real estate investment, you can always walk into the property, touch and feel it and meet your new tenants. If you, however, owned the shares of real estate business in your account then that, however, does not seem to be real to you. Since stock market investment does not feel as real as property investment, this is one primary reason why the maximum investors feel secure and happy about owning a property rather than owning shares of companies.

Real estate also does not have a market value quoted

Real estate offers much less return after tax after you adjust it to the inflation rates. However, it still seems to be better than stocks because the real estate value does not have a market value that changes every day. They have no clue about what is going on in the real estate space, and all that the investors are worried about is the rental income that is coming each month. The investors are not aware of the move in the interest rates and that the intrinsic value of the property that they have invested into is also changing each day, just as stock or bond market does.

Investors get emotional because of the movement of stock prices; however, since they are not aware of any change in the real estate market, so it feels to them as a much better and secure investment option.