With the economic uncertainties we are facing, you need to be very sure about how you invest your money. You might be wondering if real estate investing and commercial real estate investing are worth the risk.
How do these investment options compare to mutual funds? In this article, we will discuss which is better between real estate investment and investing in mutual funds.
Table of Contents
What’s the Deal with Real Estate Investing?
Real estate investing deals with the purchase, sale, management, or rental of real estate to gain profit.
Some investors will spend money on developing a piece of real estate with the intention of getting more money out of it in the long run. Furthermore, real estate investment comes in many different forms.
You can buy a house and rent it out, you can purchase an old warehouse and lease it, or you can buy a commercial building and flip it for a higher price.
Pros of Real Estate Investing
If you watch videos by investment experts on the internet, you will see a lot of recommendations for buying up real estate. They would tell you to prioritize buying up land or some other property when you have the money over other forms of investment.
To be fair, those real estate proponents make a good point. Here are some of the advantages of real estate investing according to those experts:
- You can buy real estate below the market value if the timing is right and you know where to look. To see opportunities like these, you need a deep knowledge of the market.
- Real estate investments can be used to generate steady inflows of cash. If you choose to invest in apartments, for example, you can get a monthly income from the rentals.
- Real estate investments can appreciate in value. If you purchase a property in one area and the value of that location goes up, you can be sure your property will see an increase in value.
- You can claim a depreciation expense on your property which will reduce the amount of your taxable income.
- Real estate is relatively protected from inflation, unlike other forms of investment which can be severely affected.
- You may see an increase in the income generated by an apartment, condo, or residential property when you increase your rental rates. Remember that you can increase rental rates based on the inflation rate.
Cons of Real Estate Investing
Now it’s time to look at the downside of real estate investing. The following is a list of the negative aspects of investing in real estate:
- Usually, real estate investing is for the long-term. It’s not for those seeking quick returns.
- Your real estate income may not be stable. For example, it is possible that no one will be renting your property, resulting in zero income for some months.
- If you try to manage your own property, then you will have to do maintenance, which can be troublesome and expensive.
Those are the pros and cons of real estate investing and now it’s time to look at investing in mutual funds and what that can bring.
Investing in Mutual Funds
A mutual fund is an investment platform that pools together money from different investors and uses it to invest in bonds, stocks, and other forms of investment.
Pros of Mutual Funds
What makes mutual funds such good investment vehicles? Here are some of the reasons:
- One of the mantras of modern investors is diversification and, with mutual funds, you get that right away.
- When you invest in mutual funds, you don’t have to buy whole shares. You can just decide on the amount you want to invest.
- You can invest even a relatively small amount of money, which you cannot do when working with a stockbroker.
- Perhaps the biggest advantage of a mutual fund is that it is handled by a professional who has experience in investment.
Cons of Mutual Funds
There is no perfect method of investment. There is always a downside to things and mutual funds are no exception. Here are some disadvantages to giving your money to mutual funds:
- It’s not easy to pick a mutual fund, not because of the lack of options, but the opposite. There are more than 7,000 mutual funds out there and that can be overwhelming.
- The fees charged by mutual funds can be exorbitant.
- There is no real-time trading with mutual funds, which can lead to some missed opportunities.
These are just a few of the downsides of investing in mutual funds.
Which is Better? Let the Experts at Saint Investment Make the Decision
Choosing between real estate investing and investing in mutual funds may not come easy to you.
We make investing in real estate simple by providing investors with access to well-screened real estate options that have the potential to provide revenue.
Our financial experts can help guide you as they are adept at commercial real estate investing and other forms of investments.
To get started, you may fill out our online form or contact us at 949-881-7128 at Saint Investment Group today!
President of Saint Investment Group
Nic is a two decade seasoned expert in investing and capital raising, specializing in Real Estate and debt markets. With Saint Investment Group, he leads large-scale distressed asset purchases and innovative syndications for investors.