Investing in Real Estate vs. Investing in Stocks: Which is Better?

by | Feb 23, 2021 | Blog

Over the past few weeks, we’ve seen a lot of stock market craziness on full display. In this case I’m talking specifically about GameStop. 

The news about GameStop stock really highlights several reasons why I’m all-in on real estate investing, and have been for a long time:

  • You get better leverage when investing in real estate
  • Real estate is protected against inflation
  • Everyone is naturally short real estate
  • You get massive tax advantages
  • You have more control over your investment


The GameStop Fiasco

Here’s the story with GameStop in a nutshell: The Wall Street Bets reddit thread targeted it, and GameStop’s stock went from a couple dollars a share to several hundred a share. It took out a lot of hedge funds that were short, and that’s when we saw the real games come into play.

Robin Hood and other firms were shutting down and allow you to buy GameStop stock anymore. Eventually we saw GameStop come back down to earth, whether that’s because of the games that the big firms were playing, or just because the stock maybe had no value, I’m not sure.

I pick real estate over stocks every day – here’s why


#1: You get better leverage when investing in real estate

When investing in real estate, the leverage tends to be much better. You can borrow money on amazing terms.

It’s also possible to use leverage to buy stocks, but it’s usually a 2-to-1 leverage factor at best. and for a lot of people it’s hard to do. 

With real estate you can put down 20%, sometimes as little as 5%, and get loans that are locked up for 30 years at 2.5%. That’s especially true now – we went out and got a refinance at 2.25% on a 30-year mortgage recently!


#2: Real estate is protected against inflation

Real estate is naturally protected against inflation. If the Fed prints more dollars and borrows more money, that’s going to weaken the dollar of course – but real estate is naturally indexed to that.


#3: Everyone is naturally short real estate

You have to pay for a place to live every month. There’s no way around that.

One option is to go long on real estate by buying it. If you’re short it, makes sense that a long position would counterbalance that risk – that’s another big reason why I like investing in real estate.


#4: Massive tax advantages

When you invest in real estate you’re able to defer taxes, reduce taxes, and otherwise enjoy massive tax advantages – which means putting more money in your pocket right now.


#5: You have more control over your investment

Stocks are always at the whim of the market. 

If you’re invested in Apple and they have a bad day, there’s nothing you can do about it. If Amazon has a bad day, you can’t call up Bezos and give him your advice or ask him to do something about it.

And as we’ve recently seen during the GameStop fiasco, firms can play rigged games that you can’t do anything about.

With real estate you have lots of options. You can refinance, repurpose, sell, lease, you can go from short-term to long-term rental or vice versa. You have more control. You don’t have those options when it comes to the stock market.

As we saw recently, Wall Street doesn’t want you to win, they want to win at your expense. They can’t do that with real estate. RobinHood can’t shut down your ability to buy and sell real estate!


The bottom line on real estate investing

I’m all-in on real estate because of the amazing leverage, protection against inflation, the massive tax advantages, and the amount of control over the investment.

Dan Lesniak has sold billions of dollars’ worth of real estate, developed over 500 homes, and written multiple best-selling books. He is a speaker, real estate coach, six-time Ironman, father of four, and husband to Keri Shull.

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About Dan

“I never grew up thinking I would have a real estate career. It was not something I planned. It actually was born out of what I thought at the time was failure…”

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