Investors are in search of other options to invest in, as opposed to investing in a volatile stock market. They are seeking rental properties to grow their portfolios. While stocks have the potential for unmatched growth, they likewise possess inherent risks that can result in profound losses. As an alternative investment, rental properties give investors a profitable option compared to stocks and bonds while keeping the risks low. And contrary to the old owner-landlord way to rental properties, today’s rental property investors are making single-family rental homes in Greenwood work better and smarter with the support of a team of property management professionals.
The question of which is a better investment, stocks or rental properties, will regularly bring about a wide range of explanations. The rationale for this is easy: what does “better” mean? Various investment options have different advantages as well as drawbacks, and so trying to figure out the ideal alternative for any one investor depends on things such as how much risk they are willing to take and how long they can wait for the payoff.
To have a true sense of the contrasts 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 developed economies.
What they discovered 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 contradicts with a lot of investors who focus in one investment area (i.e. stocks) over another, with stock investors greatly exceeding the number of those investing in rental properties.
There are really good justifications for this choice, 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. Lastly, countless investors select to purchase stocks because it is truly a passive income – there are no steps needed beyond initializing stock transactions.
On the other hand, as the previous years have revealed, investing in stocks carries an inherent risk of disaster. An economic downturn can completely wipe out an entire stock portfolio, guaranteeing an investor with nothing. To mitigate this risk, lots of investors are reevaluating rental properties as an alternative investment.
There are a lot of benefits to investing in residential rental properties as opposed to the stock market. In accordance with the study, rental properties are a highly 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 other means in the economy. The need for rental homes oftentimes only increases in an economic downturn. What is more, the right rental property can begin producing rental income almost immediately and keep on doing so up until the property is eventually sold many years later for a sum much higher than the original purchase price. Though the down payment has a tendency to be an obstacle to new investors in the rental real estate market, there is a good probability that you’ll have that money back plus a significant sum on top.
Regardless of whether you’re seeking for an alternative investment to balance a stock portfolio or you’re good to fully go as a rental property owner, Real Property Management Indianapolis Edge is here to aid you. We offer residential property owners with full-service property management support, intending to make real estate ownership into a genuinely passive income opportunity. We look after the everyday tasks so that each rental property is fully functioning for you, making you free to grow your wealth and realize true financial freedom. Contact us online or call 317-420-8500 for more helpful information.
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