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Stock Market Vs. Rental Properties

Rental property may give some perceived pros and cons and we intend to explore those and so you can make a better decision in how to invest your money. The main perceived con to in investing in Coeur d’Alene rental property investing because they believe that it will soak up most of their time and will therefore produce lower net returns than investing in stocks would. However the most savvy investors have a diverse portfolio that includes rental properties. We want show you four four benefits to Coeur d’Alene rental property investing, and in opposition we to stocks only including some of these benefits.

Constant income is a big advantage that real estate investments have over stock investments. After any other debts and expenses have been paid, income is left over. Remodels, updates, or general fixes are part of your expenses to pave the way for your best rental rate and income. The greatest benefit to rental properties is a semi sustainable “cash flow” with monthly rental rates.

Coeur d’Alene rental property investing uses leverage, or a loan against the initial purchase of the property, to put a portion of the monthly mortgage payment toward two things: to pay the interest and to go toward the equity. For anyone who owns a home, this should seem like familiar territory. However, there is a twist in that the mortgage payment isn’t coming out of your pocket, but rather the tenant is buying the building for you. If you think about it in those terms, it seems great because when was the last time someone offered to buy stock for you?

The greatest benefit is that you get tax benefits as well. Owning a rental is one of the most powerful tax benefits that you can get. Even if you are making money, depreciation on the property allows you to claim a loss. Over time, this will fade slowly, but then you can do something else to help with your taxes. You can use a 1031 exchange when you want to sell the property. After that, you can buy a different one without paying any tax on capital gains. Then you can start the process all over again. Now of course we do not recommend you do this on your own, but rather with the right guidance and accountant.

Appreciation is when you can sell an asset and make back more money than you paid for it. And if you are in real estate and living in Coeur d’Alene then appreciation is almost guaranteed. It is the reason people buy into the stock market. However, many people don’t think that will happen with real estate, which isn’t true. Real estate will appreciate as the real estate market continues to inflate. Now, of course you have to watch the economy, but savvy investors stand to make a dollar from this type of buying and selling.

But isn’t real estate a lot more work than stocks?

If you are paying for the rental property and taking care of it, then yes, it is more work. You will have to do the maintenance and answer every call you your tenants, turning a property around, finding tenants, etc. But it doesn’t have to be that way. You can hire a professional property manager to handle these aspects for you. Think of a property manager as your stock broker. Even once you pay manager fees, with a good management company, you will be seeing income and they have more connections that make time between renters minimal, so your income is more consistent. This is because a property management company will make your tenants which will play into their retention, cut down on vacancy time, resolve problems quickly, and even work to get you the best maintenance costs.

Would you like to learn more about our Coeur D’Alene property management services? Please contact us for more information.

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