Is Real Estate Too Risky?

The argument is as old as time. Why would I invest in “risky” real estate when there are so many opportunities that are “safer”? We have all read articles on why real estate is a better way to invest your money and how it can yield better returns; however, is that still true? Has accessibility to the internet altered the way we interact with real estate and stocks alike?

 When comparing security between the stock market and real estate, it is important to define security, which means, quite literally, the state of being free of danger or threat. “Being free” is something that every real estate investor I’ve known has aspired to, and it is usually why they got started on the real estate journey in the first place.

 The ability of real estate to generate passive income each month—cashflow that’s often greater than a real estate investor’s previous salary—is just one reason investors are drawn to it.  Sure, you can earn dividends from the stock market, but it is rare that they come close to the steady volume of cash that an investment property can generate.

Money in the door equals freedom NOW. Furthermore, the real estate market is not dependent on whether a CEO tweets an inappropriate comment or gets arrested for insider trading, like stocks are. Time and time again, there have been cases of CEOs misbehaving and stocks tumbling because of their actions. Consequently, one of these investment strategies speaks loudly about danger and threat, while the other does not.

There is also an argument to be made about how the internet and social media combined affect investment choices and outcomes. With the ease of access to the internet, there is an increasing number of people who want to invest based on what they see and read online.  For instance, finance influencers on YouTube are talking about how they are making six figures in less than seven days, and while their stories may sound extremely enticing, their strategies are extremely risky and unpredictable.  

Another way that the internet has shifted investment strategies is by allowing investors the opportunity to invest unsupported. This is driving up the number of investors but forcing them to rely on blogs and other social media to pick their stocks. The real estate market has likewise been affected by accessibility to forms of investing on the internet, ranging from selling a house completely online to joining a syndication.