Comments on: Buy an Investment Property or Dividend Yielding Stocks

By: Cynthia

Cynthia — Fri, 23 Dec 2011 16:08:17 +0000

My husband is convinced that if he had cash to pay off our 4 rental properties, he would. He would then make them all part of an LLC (to reduce the risk of being sued by tenants if something happens at the property). He believes that his equity is preserved because the homes could at least sell for the current home payoff amount + commissions), and that all the rent (less expenses) would be all profit. What I’ve learned with real estate it that your profit (like stocks) is still so unpredictable. This year on one house we spent nearly 4K because of a plumbing backup. Two months later the tenant moved. It cost $4000 in painting and other repaires. It took 4 months to get a new tenant. And we had to rent for $150 less that what we previously received in rent. This house is only 7 years old! Because of our income level and the fact were’re considered passive investors, we get no tax breaks on all of the expenses throughout the year. We simply carry the loss. They add up, but we can’t apply them until we sell. I wish we could sell all of the homes, but my fear is that we would only get what we currently owe on them and overall will have taken a bath in costs. In comparision, when I look at my 401K, I’ve seen losses, but its still way above my total investment. Long story to say I perfer mutual funds!

By: Anthony

Anthony — Thu, 08 Jan 2009 16:19:02 +0000

Your discussion was very interesting. We are in a unique situation that many in the real estate investing community say will never happen again in our lifetime. Stocks historically have been a better investment because of the compounding of interest from dividens (I am starting to learn about stock). I suggest seeking out a wholesaler when buying a real estate investment. You can can a much better deal.

By: farouk

farouk — Sat, 15 Nov 2008 14:16:54 +0000

i love the picture:)

By: Bob

Bob — Sat, 08 Nov 2008 14:55:19 +0000

Altria is in the business of giving people cancer. A house provides shelter and safety to other humans. Buy the house, and sleep with a clear conscience.

By: Gabriele Muellenberg

Gabriele Muellenberg — Mon, 27 Oct 2008 11:48:09 +0000

First, I wouldn’t touch stocks or bonds because, I understand too little about it and I don’t have enough cash to play with which means for me putting an egg into a basket which could be a gamble.

On principle, one should only buy investment in form of property in the best neighborhood. It’s better to buy a come down property in an expensive suburb at a low price than buying any new property in a new or fashion suburb at a normal price. Fashion comes and goes.

One should never buy by a river, close to a lake or ocean, where landslides could occur or in a dip where water can collect during torrential rains nor on unstable grounds.

When buying new property it’s important that insurance has been taken out by the builder or construction company to cover building errors which might show up later.

Otherwise, find out if you can have a rental contract accepted for 6 months only based on some personal rental conditions. That way you have some idea of what sort of tenant you will have.

It may be wise to discuss this with a real estate lawyer.

By: Moneymonk

Moneymonk — Wed, 01 Oct 2008 23:25:37 +0000

I like the stock. You forgot to add in the additional risks of real estate. Tenants moving out, repairs and you cannot sell a house as quick as a stock

By: Cahya

Cahya — Tue, 09 Sep 2008 14:03:38 +0000

That’s sound great.

By: Optionsforstocks

Optionsforstocks — Mon, 08 Sep 2008 22:29:44 +0000

RENT YOUR STOCK AS YOU RENT INVESTMENT PROPERTY?

I like the comparison. If are not a handyman, an investment property especially a house can create a havoc in the middle of night when tenant start calling for trouble i.e., water pipe burst in kitchen on a winter night.

I would like to add another dimension to your analysis. Treat stocks as investment rental property. Sell a covered call(what I call rent the stock) on MO for every two months. At present, it is generating a return (rental income of 1.5% every month) while you will be entitled to receive dividends as well.

For more discussion, please visit:

http://optionsforstocks.blogspot.com/

By: Mike

Mike — Fri, 05 Sep 2008 17:43:00 +0000

Mello roos? Sounds like a type of cookie.

I think Joe has a touched upon a good point. For me personally, I don’t want to have to deal with all of the hassle of investment property, especially after just viewing what Professor Schiller said about housing prices over the past century.

If one is seeking diversity through real estate, REITs would seem to offer a much easier approach.

By: Joe

Joe — Thu, 04 Sep 2008 21:04:37 +0000

MoneyNing,

I’d stick with the stock. Here’s why…

I’m not cut out to be a landlord, and if Altria (or whatever stock) took too much of a hit it’s easier to minimize my losses and sell it. Real estate is a fickle beast, and not as easy to sell when things turn south.

Here’s an idea: why not split the difference and invest in a REIT, or REIT index like Vanguard’s VNQ? REITs (like the underlying real estate) have taken a hit and are selling at a discount. They pay a hefty dividend, and you can let someone else be landlord.