Real estate or Stocks?

RumChicken
RumChicken

Hi Veeky Forums, I recently came into a good chunk of change (30k usd) and now all the sudden everyone says I should be investing with it.But I don't know anything about this sort of stuff.

I know nothing of stock investment, and frankly it scare's me to just give my money to some random guy who will invest for me.But I did work with a landlord as a handyman and he always said rental properties was the future of big money.My area to buy land in is south California but the apartment complexes are stupid expensive to buy there (average:200k and up).

My question is:Which should I go for Stocks or properties?

Stupidasole
Stupidasole

Property is vastly better than stock. But property has more risk.

You need to buy when the land/homes market is down. AND you need to buy in an area that is definitely gonna grow.

My dad was a land developer for 35 years.

Spamalot
Spamalot

Hmm, so buying when the market is down sounds easy enough.

But how is property more risky than stocks?Shouldn't it be the other way around?

takes2long
takes2long

becaue when u make money in property what do u invest that money in to diversify?

stocks

w8t4u
w8t4u

This. Location is everything. My Great-Grandma bought land and built a house for $90K in Alexandria, Virginia back in the 50s. She passed away and of course instead of keeping it in the family, my Grandma cashed out $1.2M and moved to Miami. They take monthly trips to Vegas. I haven't talked to them since but I'm pretty sure they blew it all and are working again.

lostmypassword
lostmypassword

Ahhh, I have hear people talk about diverisfying their investments and such.But for someone new to it all wouldn't I just focus on keeping my property afloat and then diversify after say 5 years or so (after its paid off).

Carnalpleasure
Carnalpleasure

From what I read the city of Los Angeles is a constantly growing city but in a housing bubble atm, but would that affect the whole of the county the city is in?and if so should I just wait till the bubble pops then buy up what I want at lower prices?Theres a huge military base south of the city and I intended to buy around there for the constant stream of people and Oceanside.

LuckyDusty
LuckyDusty

picking individual stocks is risky as all hell. only play with money you can stomach to lose. 30k does not hit that threshold in my opinion.

investing in funds (usually ETFs) should be more your speed. you get less profit because the fund takes a cut, but you have the safety of a diversified portfolio (and a hopefully professionally managed portfolio on non-ETFs). still - my general rule of thumb is to never invest in anything you don't understand or care for on a very fundamental level. jumping blindly into the world of securities is not really a great idea on your first couple grands.

rental properties are comparatively safe. property values may fluctuate, but you don't want to sell anyway. the main risk comes from tenants and that's a risk you can personally control. it's great for keeping your assets safe from inflation - the rent should be indexed and the property value also goes up with inflation. in turn the potential for massive profit is much lower than with stocks. you'd have to hit a jackpot with the right area to participate in substantial appreciation of your land.
with rental properties you're usually playing the long game. you basically can't lose money - your initial investment is now a house which you can always sell. but if you never sell you can view it as swapping an initial payment for an eternal series of smaller payments every month. depending on what you pay, what you do yourself and where you are you can expect a rental property to turn a profit at 15 years down the line at the earliest. but at that point you've gotten your money back AND you still have the property which usually leads to a snowball effect where you keep getting more and more real estate.

the biggest problem is probably the prohibitively high barrier of entry. 30k is simply not enough to buy any meaningful property, especially not in SoCal. You can leverage them with loans, but that means until you pay off your loans you don't even get monthly returns.

Spamalot
Spamalot

I also have an important question anons!

Should Sanic The Hedgefund be the mascot of Veeky Forums?

Check'em.

Spamalot
Spamalot

Stocks generally rise at a pretty consistent rate over the years assuming you have a diverse portfolio.

Land is more volatile. When 08 happened there were pieces of land that lost 80% of their value and still have not really recovered. In the event of a bubble pop, land and homes get hit harder than anything else.

Personally I would not buy anything right now. The market is too hot and IMO inflated.

takes2long
takes2long

Right now is not the time to buy stock or real estate.

Gigastrength
Gigastrength

what would you suggest he does with his money then? Trump Coin?

Dreamworx
Dreamworx

Gold. Or a reliable business venture if you can get a hold of one.

Lunatick
Lunatick

You can leverage them with loans, but that means until you pay off your loans you don't even get monthly returns.
As long as you've got your 20% down youre good to go, since the rent payments should cover the mortgage. But of course maintaining the quality of a building takes a lot of money too.

girlDog
girlDog

I disagree, 2008 was the first nationwide real estate crash in well over a century. It's called real estate for a reason, it's a physical asset. 2008 was a special case, land recovers and holds its value. They aren't making new land anymore after all.

Gold isnt really an investment. It'll hold its value during a period of high inflation but there's not much you can do with it. You can increase real estate's value with new construction and rent property on it.

haveahappyday
haveahappyday

All true but the RE market is clearly inflated right now.

But I could be wrong and we'll see several more years of growth m

SomethingNew
SomethingNew

what is a REIT

iluvmen
iluvmen

In most cases it's a mutual fund compromised of stocks like Simon Property Group and Public Storage. Why? Are you implying it's the same as owning property?

TreeEater
TreeEater

The margins aren't as high as owning and managing your own property. Lower risk, but you're basically hiring middlemen to take a slice of your profits.

Probably better just throwing the money in an S&P 500 index vs REITs.

CouchChiller
CouchChiller

Yes investing it is the right choice, just don't put it directly into stocks with no trading experience like these other idiots are telling you to do. Put it in a Vanguard 500 Index fund and coast

GoogleCat
GoogleCat

now isn't a great time to get into real estate, especially when you've only got 30k.

Nojokur
Nojokur

buy options on 3x leveraged etfs

PurpleCharger
PurpleCharger

It all depends as far as "not enough". Some of the so-called linear markets like little rock, memphis, and parts of atlanta are still reasonably priced. As long as you buy wholesale it can still have good cashflow. It all depends on where he is and what that market looks like.

My advice would be if youre seriously thinking about real estate, join your local real estate investors group and go to the meetings. Usually they are all about teaching ppl what to look out for, how things are done, and are a great source of vetted contractors.

Fried_Sushi
Fried_Sushi

They aren't making new land anymore after all.
tell that to the chinese

Crazy_Nice
Crazy_Nice

Just go to Hawaii. Genuine Land™ Made in America™

None of that cheap sandbar knockoff bullshit.

FastChef
FastChef

FHA loan on a multi unit, live in one rent the rest. Or down payment for a 150K rental.

GoogleCat
GoogleCat

stocks. dont even consider real estate at the moment. and even historically, it's been a terrible investment returning 1% annual

kizzmybutt
kizzmybutt

Only if you only look at appreciation for ROI. You can cash flow well every year, and if you have any sense, you reinvest some of that money into more stuff.

That's not even counting flipping, though flipping isn't a long term investment plan, so it's not a great comparison.

hairygrape
hairygrape

REITs

PackManBrainlure
PackManBrainlure

seems like most people already deal with a ton of middle-men in real estate. might as well make it possible to sell anytime

Carnalpleasure
Carnalpleasure

I know nothing of stock investment
Do what you know. If you try to get into trading you'll probably fuck up for at least 3-5 years.

DeathDog
DeathDog

That's my point. If you want the flexibility, just invest in a good stock portfolio. REITs are worse for long term investment.

Real estate itself is better if you are managing it yourself.

Carnalpleasure
Carnalpleasure

Do not force memes.

Skullbone
Skullbone

Put it somewhere safe where it won't be taxed but instead draws interest, but somewhere you can pull it all out anytime and just wait.. wait for an opportunity to arise, don't force it.