STRATEGY
WEALTH BUILDING
4 Reasons Real Estate Is Better Than Stocks
WHY APARTMENTS LAST LONGER AND ARE BETTER WEALTH-BUILDERS
by Grant Cardone
ot just anyone can go buy an apartment deal. Schwab or
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24 percent of the real property value against other investment income. This is a tremendous advantage over stocks for high earners. 3. DEPENDABLE CASHFLOW With banks paying people with sav - ings accounts just over zero interest (.18 percent) and dividend yields of the once-classic dividend stocks being terminated or cut to almost nothing (GE, Disney, etc.) real estate offers consistent cashflow at 5-7 percent annualized, which is about 50 times what banks are paying on a savings account right now. 4. DURABILITY Technology is killing off compa - nies. While the average company in America used to have a lifespan of 60 years, these days it is not uncom - mon to see a high-flyer disappear in a flash. Large apartment complexes can produce income for decades and are very difficult to replace due to regulations and their cost to rebuild. While the media pours attention on the high-flyers, the reality is that the stock market has more losers than winners; GE was delisted from S&P,
Lehman almost took the world down. Remember Blockbuster, Eastman Kodak, and Victoria’s Secret? It seems the airlines file bankrupt - cy every ten years or so. Ford and GM are both operating at a fraction of their all-time high. Meanwhile, apartments in cities across America continue to provide cashflow and ap - preciate in value through both good times and bad times. The negatives of apartments versus stocks are you have to know what you’re doing as an investor. Also, the real estate investment is not as liquid. While one stock can trade a million shares in a minute, an apartment with long-term debt won’t trade for years. Maybe that’s why they last longer. •
Fidelity will let even an idiot buy a stock, but to find a property, get funding, and manage it requires an experienced investor resume, liquid - ity, property management skills and more work, which reduces the buyer pool. Here are four reasons why investing time in understanding real estate will reap more investment benefits for you in the long run. 1. LEVERAGE Because apartments provide dependable income, an investor can use $250,000 to buy $1,000,000 worth of cash-positive real estate. Stock investors cannot and should not use leverage when buying stocks. Leverage is the ultimate way to create wealth and in the case of apartment debt, unlike homeowner or consumer (bad) debt, the tenants pay off the mortgage over time. 2. DEPRECIATION It is no secret that real estate of - fers the last refuge for tax write-offs. In one year, employing bonus depre - ciation laws, we can often write off
Grant Cardone owns and operates seven privately held companies, and a $1.8B real estate portfolio as the Founder and CEO of private equity real
estate firm, Cardone Capital. Cardone is also the founder and leader of The 10X Movement and The 10X Growth Conference, which is now the largest business and entrepreneur conference in the world. Moreover, Cardone founded the Grant Cardone Foundation, a non-profit organization dedicated to mentoring underprivileged and troubled youth in character and financial literacy.
60 | think realty magazine :: december 2020
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