First day at the RISE Conference | Stocks Vs. Real Estate Investing

Well today was an exciting today at the RISE Conference, there was a ton of spakers.  Including some of the ones I enjoyed the most were Peter Coors, CEO of the Coors brewing company, Ralph Avarzes, CEO of McDonald, and abunch of other analyists and economists.  This conference is definintely for Finance Majors, idk if I would go again, we still have acouple of days but its not really entrepreneurship.

I didn’t find myself networking a terrible alot because everyone is focused on getting jobs as portfolio managers, stock analysits, and finance sort of stuff.  Nothing wrong with that, but when I talk to abunch of people all oriented going that different just not something I’m that interested in.

Like the Richard Parson’s visit from the CEO, I had front row seat, infront of 1,200.  Front-row seating, I could see everyone, eye contact with the speakers, just arriving early.  The information in the front is different than the back seats.   Always sit in the front if you can, I had the straight, middle seat, in the front row infront of everyone.  It was awesome!

Well as much as there was interesting information it is really interesting to see peoples’ views, everyone here it seems like is very biased in stock portfoilios.  I’d personally have real estate portfolios for tons and tons of reasons over stocks.  While stocks are good, I’d like to emphasize a couple of key points why real estate is potentially a superior investor for most people.

They were talking about how house prices may go down, and the housing bubble.  And yes, theses people probably know alot more than me, but in the last 40 years, how many years have the medium house price gone done?  That would be none.  Even if housing prices are bad, just like the real estate deal I’m doing right now.  I’m purchasing it below price because you can negotiate.

Theres one main thing I want to impact on though, and those that participated in the real estate club will understand this factory.  Everyone is saying stocks are better investment that real estate, although what I found out what they were saying is stock investing vs. REITs, or real estate investment trusts, or basically stocks that invest into real estate.  But they were even talking about the real estate market.

They are like well on average you may be getting 5% appreication on your houses.  Compared to 15%ish on the stock indexes.  Well, like theres a big difference there, and there is.  But for most of the students they don’t get it. 5% appreication on your house, compared to 15% on the stock, of course the stock sounds better.  But here is what MOST students don’t understand, and most people don’t understand why real estate is actually in some cases alot better.

Say ok, well you get 5% appreicaiton on your house, will a little bit of homework, you can easily get probably 8%+, 5% is really low.

But here is the difference.

Lets say I have $100,000 in stocks, ok, great, that goes up 15% lets say.  I know have $115,000 I grossed $15,000.  Pretty good

and my piece of real estate was $100,000 and it appreicated say only 5%, so my property is worth $105,000, so I grossed about $5,000.

But heres the catch, see in real estate, what if you just put 10% down to controll that $100,000 piece of property.  Like in my example, I’m putting 10% on a downpayment.

So then recaculate here, if I put 10% down on $100,000 property, that means I’m putting $10,000 down.  Well, my house appreciated 5%, my $100,000 house appreciated 5%.  Ok so my house is worth $105,000.  I made $5,000.

Well, wait a minute, I made $5,000.  I invested $10,000.  How much did I gain, I made a 50%!!! return on my investment compared to a 15% ROI on my stock transactions.

SEE THE RETURNS IN REAL ESTATE ARE MAGNIFIED BECAUSE OF THE LEVERAGE OF USING OTHER PEOPLE’S MONEY.  I MAY ONLY GET 5% ON APPREICATION, BUT I’M GETTING APPRECIATION ON THE MONEY THE BANK IS LENDING ME.  I’AM MAGNIFIYING MY RETURNS BECAUSE OF THE LEVERAGE FACTOR.

And btw 5% is garbage, north portland is appreication 16% a year for the last 5 years.  With 10% down, that means I’m getting a 160% return on my investment each year.  Stocks beat that, banks won’t lend u money to do that with stocks now will they.

So thats just one example, don’t be fooled when people tell u well real estate appreicates less, and the housing market is going to crash.  They are obviously not real estate investors, and most people don’t understand how leverage works.

There really isn’t any leverage in stocks unless u do options and stuff.

And to top that,

not to mention the tax beneifits, 1031 tax-exchanges, you can save all ur money on capital gains.  Can’t really do that with stocks unless u have an IRA.

More tax benefits depriciation, you get writeoffs because of depreciation of your building.

Amoritization, you have a rental income, you got that mortgage.  The renters are paying for that.

Had if your stocks crash, you’ll loose all ur cash.  My building burns up, I have insurance to cover it, and besides I still own the land.

You have to buy stock at its current going rate, in real estate, you can negoitate and get a steal deal.

Those are just a few of the reasons I prefer real estate over stocks, yes stocks are good, I’ll do stocks, I do stocks right now, but I’m going to do MAJORITY by FAR in real estate.  Leverage, Leverage Leverage, used properly will make you rich.

Your thoughts

  • Incredible! This blog looks exactly like my old one! It’s on a totally different topic but it has pretty much
    the same page layout and design. Great choice of colors!