Real Estate vs. Stocks: How Profitable is Real Estate as an Investment?
64Real estate in North America has traditionally outperformed or similarly compared to the stock market in the medium and long-term. When properties are leveraged (i.e., financing is used to purchase properties) real estate investments have substantially outperformed all major stock indices.
It is clear from the chart below that unleveraged (0% debt) real estate has yielded significantly higher returns for more than 5 years and 50% financed real estate has returned higher yields than the stock market over any period.
The chart below illustrates historical returns of real estate vs. stocks and includes the major North American stock indices as comparisons.
The figure below illustrates the typical growth rate for 50% leveraged properties in North America. However, many real estate investments are financed to a much greater extent: often up to 80%. Using more financing will increase returns well above those shown below.
It is clear that, particularly with the responsible use of financing, investments in real estate significantly outperform investments in stocks over time.
ucanworkathome2 18 months ago
This is correct, but if you truly want to build wealth with real estate invest for cashflow rather than capital gains. When investing solely for capital gains you suffer when the market is weak. When investing for cashflow a weak market can be beneficial since you can acquire properties at a lower price.