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Are you planning on investing in rental property vs stocks but you’re also wondering which one will make the better investment in 2021?

In this article, we will break down the pros and cons of investing in rental properties vs stocks and provide you with insight into which option is the best investment for 2021.

Why Invest In The Stock Market?

Although the stock market crashed in March at the beginning of the Covid-19 pandemic, stocks have been up for most of 2020 and the stock market is back above 30,000.

The Stock Market has beaten the expectations of every investor and market analyst this year since many people predicted that stocks would plummet this year along with the economy.

Most investors who research Rental Property vs. Stocks often end up choosing stocks first because they are a highly liquid investment that also enables an investor to diversify their portfolio across a variety of companies nationwide.

In today’s world, it’s easy for just about anyone to get started investing in stocks because most companies offer IRA retirement plans so the average person can get started investing in stocks, even on a casual basis.

For investors who are serious about investing in stocks to build up their investment portfolios, it’s never been easier getting started with investing in stocks, especially if an investor uses an app like Robinhood or Webull.

Liquidity and flexibility are two of the key reasons why most investors choose to put their money into stocks because an investor can easily cash out their stocks at a moment’s notice and they also have the flexibility to invest in stocks following opportunities.

A good example of opportunity, or ‘recovery stocks’ can be seen right now in the hospitality, entertainment, and restaurant industries since each of these niches have been affected by Covid-19 and are sure to recover following the release of the vaccine and reopening of these industries across the United States.

Risks That Come With Investing In Stocks

Investors who have a sizable portfolio in the stock market have to be ready to accept that risk is a part of life when they are invested in stocks because another crisis like Covid-19 can trigger a market crash and they will lose money unless they sell before the crash.

Even though some investors who are searching rental property vs. stocks might not like the idea of having to deal with another crash, the reality is that stocks will always be attractive to investors who are willing to deal with risks in favor of the ROI that comes from owning stocks.

Stocks like other investments do come with additional fees that are paid to brokers and for transactions but the great thing about the internet is that it’s now possible to find broker accounts that in most cases don’t charge any trading fees at all.

Last of all, when considering real estate vs stocks, it’s also important to consider that some traders may have to pay capital gains tax when they sell their stocks so keep that in mind if you plan on selling your stock after less than one year.

If you plan on holding your stocks for more than one year and plan on selling, you should consult with your CPA because you could ultimately pay taxes at a lower rate.

Why Invest In Real Estate?

Although the Stock Market is currently over 30,000, the reality is that crashes have happened before in 1929, 1987, 2008, 2020 and investors have trillions of dollars.

Stock Market instability is one of the biggest reasons why investors diversify every year and start investing in the real estate market.

Real estate is ideal because unlike stock, it’s easy to understand how the market works. After all, it’s all about supply and demand.

As long as you do your due diligence and thoroughly research the property that you plan on investing in, you can count on owning an asset that there’s going to be a demand for,

In 2020-2021, owning real estate is even more ideal than ever before because unlike previous generations, our country has turned into a nation of renters who want to rent vs. buy properties due to the high cost of real estate in some states.

Benefits Of Owning Real Estate

Owning real estate is great because there’s a wide variety of tax benefits including tax deductions on mortgage interest that’s paid up to $1 million in mortgage debt. Besides this, there are also many tax breaks that investors can qualify for including the ability to avoid paying capital gains on up to $250,000 if you’re single, and $500,00 if married.

If you plan on financing your first investment property, you can also have confidence in knowing that real estate debt can be considered to be ‘safe debt’, since the debt is tied to an asset, compared to margin trading in the stock market.

As I mentioned above, the most important benefit of all is that real estate is a great asset to own, especially if you own rental properties, because they are always in demand by renters across the United States.

In my opinion, the best properties to invest in 2020-2021 are multifamily properties because apartments, townhomes, condos, and other multifamily properties are often the first choice of renters nationwide vs. single-family homes.

Most renters prefer multifamily because of the convenience that comes from living in multifamily along with the amenities and benefits.

Rental Property vs Stocks – Which One Is Better?

Ultimately, the decision to invest in rental property vs. stocks is up to you.

Seasoned investors will diversify and have some money in stocks and money in the stock market because it’s always a smart idea to never put all of your money into one investment vs. the other.

The future of stocks and real estate looks bright, and the future is now, so it’s best to create a plan for getting started with investing in one versus the other in 2021 so you don’t let another year pass you by without you investing in stocks or real estate.

Contact Trier Capital

At Trier Capital, our simple step-by-step process allows you to accelerate your wealth creation so you can live a magnificent life on your terms, whether that means traveling the world, spending more time with family and friends, or making an impact. 

Learn more about how we can help you get started with investing in multifamily properties, and building wealth by calling me at (630) 229-2383 or click here.

Erik Hatch

Erik is currently invested in projects in Florida, Texas and Kentucky totaling $79 Million. He is an accomplished leader who motivates and inspires action while at the same time, is grounded in business metrics and information that drives successful businesses.