Many investors debate between putting money into the stock market versus real estate market. Each option has its own pros and cons. However, stock market volatility makes real estate a solid investment. Here’s a closer look at the differences between the two and why real estate is more stable.
Stock Market Investments
There is little control when it comes to stock market investments. Although shareholders do have some voting power, you really have little say when it comes to the day-to-day operations of the business. It’s a more passive form of investment where you rely on your research and other sources of information to make an educated guess on future success.
The benefit of stocks is its liquidity. You can buy and sell at-will. However, this is also what makes it so volatile. Within days, hours, or even minutes, values can dramatically increase or decrease. How does this compare to real estate?
Real Estate Investments
Although real estate investments are not liquid like stocks, they are also not as volatile and risky. Investors who purchase commercial properties often do so because of the income potential. However, there are also other ways to participate in the real estate market. Here are a few:
- Buy properties to fix and flip for profit.
- Purchase land for commercial development.
- Participate in a real estate partnership.
- Buy and hold property for rental income.
These options give real estate investors of all types the ability to participate at a level at which they feel most comfortable. Investment amounts can range as well from smaller 5+ unit residential buildings to larger complexes and commercial buildings. Unlike the stock market, investors have influence over the success of their investment through their decisions on what particular properties to buy and how to develop or manage them.
Why Stock Market Volatility Makes Real Estate a Solid Investment
The stock market can be quite unpredictable at times whereas real estate is much more predictable. Over time, real estate values have always gone up. Even during temporary slumps, the market manages to recover and eventually exceed its previous performance. Stock market volatility makes real estate a solid investment, comparatively. Many investors participate in both in order to provide some balance and stability to their investment portfolio. Whether you are a new or seasoned investor, contact ABG Commercial Realty for assistance with purchasing, leasing, and or managing commercial real estate.