When people hear "10% return," they think, "That's great!" But here’s the kicker—10% in real estate is worth a whole lot more than 10% in the stock market. Why? Real estate brings serious perks like tax benefits, leverage, and control over your investment. Plus, it’s a tangible asset you can actually improve.
Bob Waun, co-founder of DIRT Realty, says it best: “Real estate returns aren’t just about the number. When you factor in all the advantages like tax breaks and leverage, real estate blows stocks out of the water.”
Let’s see why.
Leverage: Your Money Goes Further in Real Estate
In real estate, you can control a big asset with a small investment. A $300,000 property requires only $60,000 upfront (20% down), but if that property appreciates by 10%, you’ve made $30,000—on just a $60K investment. That’s a 50% return thanks to leverage. Try getting that from the stock market, where a 10% return on $60K is only $6,000.
Pro tip: Use the bank’s money to grow your wealth in real estate.
Tax Breaks: The Stock Market Can’t Compete
Real estate investors enjoy some major tax advantages. From deductions on mortgage interest and property taxes to depreciation, your taxable income can shrink fast. And if you use a 1031 exchange, you can defer paying capital gains taxes by reinvesting the profits from a sale into another property.
Stocks don’t offer these perks. You sell stock? You pay taxes—simple as that.
“Real estate investing is one of the most tax-efficient ways to build wealth,” says Waun. “With deductions and exchanges, you’re keeping more of your money.”
Compounding Wealth: Real Estate Builds on Itself
Real estate gives you multiple ways to grow your money: property appreciation, rental income, and loan paydown. That’s a triple threat you don’t get in stocks. Over time, you can refinance or sell and roll those gains into new properties, creating a snowball effect that keeps building your wealth.
In stocks? You’re waiting for dividends and market swings, with no way to actively influence your returns.
Control: You’re the Decision Maker
In real estate, you control your investment. Want to increase the value of your property? Renovate. Want to increase cash flow? Raise the rent. You’re not relying on the decisions of CEOs or market analysts. In real estate, you call the shots.
“In stocks, you’re a passenger,” Waun explains. “In real estate, you’re the driver. You have real control over how your investment performs.”
Tangibility: You Can Touch It, Improve It, Live In It
Real estate is real. It’s something you can touch, improve, and physically own. Stock shares? Not so much. Real estate has intrinsic value that doesn’t fluctuate as wildly as the stock market, making it a safer, more reliable asset—especially in uncertain times.
“People will always need a place to live or work,” says Waun. “That’s what makes real estate such a stable investment.”
The Verdict: Real Estate is the Better Deal
While a 10% return in the stock market may sound appealing, real estate gives you so much more. With leverage, tax advantages, compounding growth, and control, a 10% ROI in real estate easily outperforms the same return in stocks.
As Waun puts it: “Real estate is a no-brainer. You’re getting multiple streams of income, tax breaks, and more control. It’s the smarter way to grow your money.”
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