Investors searching for alternatives to investing rather than in a volatile stock market are now looking at a rental property to grow their portfolios. While stocks have the potential for unmatched growth, they retain inherent risks that can result in profound losses. As an alternative investment, rental properties give investors a profitable option to stocks and bonds while keeping risks low. And contrary to the old owner-landlord method to rental properties, today’s rental property investors are making single-family rental homes in Lewisville work more efficiently with the aid of a team of property management professionals.
The question of which is a better investment, stocks or rental properties, will consistently result in a wide variety of answers. The basis for this is simple: what does “better” mean? Several investment options have different advantages as well as drawbacks, and so understanding what is the best choice for an investor depends on things such as how much risk they are willing to take and how long they can wait for the payoff.
To obtain a true sense of the distinctions between investing in rental properties and investing in stocks, equities, bonds, and so on, a team of economists analyzed over a century of global economic data. The study, The Rate of Return on Everything, 1870-2015, compares the returns on equities, residential real estate, short-term treasury bills, and longer-term Treasury bonds over this entire 145-year span across 16 advanced economies.
What they identified is that, on average, residential real estate had the best returns of all investments, at just over 7 percent per year. Equities, or stocks, came in a close second. This differs with some investors who focus on one investment area (i.e. stocks) over another, with stock investors easily surpassing the number of those acquiring rental properties.
There is a really good explanations for this preference, because even though stocks are high risk, high return investments, noted for their high degree of volatility, there are relatively low barriers to entry in the stock market. Equities are also highly liquid, allowing an investor to sell quickly. This is why numerous investors opt to procure stocks because it is a truly passive income – there are no efforts needed beyond initializing stock transactions.
On the contrary, as the past few years have shown, investing in stocks carries an inherent risk of disaster. An economic downturn can completely wipe out an entire stock portfolio, leaving an investor with nothing. To mitigate this risk, countless investors are considering rental properties as an alternative investment.
There are plenty of rewards when investing in residential rental properties as opposed to the stock market. Based on the study, rental properties are a safer option for investors. But unlike treasury bills (another relatively safe option), real estate offers long-term returns that are comparable to or above the rate of return on equities.
Rental properties are not tied to the stock market, or even to the economy. The need for rental homes repeatedly increases in an economic downturn. What is more, the ideal rental property can immediately produce rental income almost immediately and keep on doing so up until the property is sold off several years later for a sum much higher than the original purchase price. Even though the down payment tends to be an impediment to new investors in the rental real estate market, there is a great possibility that you’ll easily get that money back plus a significant sum on top.
Even if you’re searching for an alternative investment to balance out a stock portfolio or you’re ready to roll as a rental property owner, Real Property Management of the Triad is here to assist. We give residential property owners with full-service property management support, targeting to make actual estate ownership into an absolutely passive income opportunity. We manage the daily functions so that each rental property is operating for you, resulting in you actually being free to grow your wealth and realize true financial freedom. Feel free to contact us online or by phone at 336-355-6677 or 336-777-7444. We’ll be glad to answer any of your questions.
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