I have done stocks but never property. However, it seems to me property investors don't seem to spend as much time on active investment compared to stock investors. Stock investors spend more time monitoring the market. So, is property investing more passive than stock investing? Passive means less time is needed. For a person who wants to release more time to do other things besides investing to grow his money, would real estate be a good alternative?
Either one (stocks vs property) can be nearly completely passive or extremely intensive. It's entirely up to you. If you want to directly own rental property, I can almost guarantee this will end up consuming more of your time and energy than you expect at least initially.
One can hire a real estate agent to help manage the tenants and look for tenants. Investment income will be lower but time and energy can be saved as a result.
I own property and stocks. Property can be a nightmare dealing with renters, tradesmen, lawyers, utilities, taxes, damage, and realtors etc. Hiring someone alleviates the work load but also affects the bottom line. Day trading stocks is not good either. But using a proper strategy to harvest option premium and dividend works better. Plus it's liquid.
If you have solid tenants (pay in full and on time and take pride and care of their home) and solid (well built and well maintained) properties then yes it’s a fantastic mostly passive way to make side income. HOWEVER- one bad tenant or money pit house will be way more headache than it’s worth. Quick example about one of my properties a few years ago- 3 bed 2 bath, nice yard, very good school system and neighborhood. I had already denied a few potential renters for inadequate proof of income. Single mom and two high school aged kids dressed well looked like nice people come. Income was barely adequate, had a bankruptcy a few years before. She blamed everything on her divorce and gave my realtor a story about how her kids were going to have to leave the school system if she didn’t find a house in the neighborhood soon. I reluctantly agreed. Literally two days after she moves in she’s calling me hammered drunk in the middle of the afternoon complaining she didn’t like the paint color in some rooms (which hadn’t been changed since she saw the place two weeks earlier). Needless to say it was just the tip of the iceberg. She was late on the first two months rent then stopped paying altogether. She would call/text me a few times a month with bullshit excuses and many many drunken slurring rants about basically nothing. When I threatened eviction she started sending me pictures of a dead mouse on her kitchen counter and said I was making her family live in poor conditions! Now mind you, I had saved every text and VM this woman ever left me. At no point did she ever ask for pest control or any such thing. Anytime she asked for anything (plumber, electrician whatever) I had somebody there within 24 hours, even after she stopped paying rent! It took a couple of months to get a court date for eviction. Turns out she was basically a professional “rent scammer” for lack of a better term. She knew all the angles and would bounce from rental to rental living for free until she got evicted. She didn’t even show up for the eviction hearing because the court knew her!! She left the house in complete disarray. All in she cost me 6 months of rental expenses, multiple half days of missed trading to attend lawyer/court meetings, thousands in cosmetic damages, and countless headaches. After she left I rented the house to a nice professional couple who have paid on time and in full every month, and have called me twice in two years for maintenance (once a plumber for the toilet, once for broken refrigerator). Long story short- HOLD OUT FOR SUPER WELL QUALIFIED TENANTS!
I do both real estate and stocks. Real estate was first as it is what my parents did. I've self managed and hired managers. Hiring managers is only the way to go if you have no alternative. You will pay their fee, they will give repair work to their preferred guys-not always the best or cheapest- Time was is tough to calculate but I do have much less aggravation with stocks. No clogged toilets, no chasing the deadbeat tenants for the rent etc. I trade and buy real estate for income. If one is buying for long term appreciation, I would stick with stocks and build a good dividend paying portfolio with minimal rebalancing. Best of both world's IMO and what I would do if I could turn back the clock.
Screen, screen and screen some more is absolutely money and time well spent. I do the eviction thing differently now. I get 2 of the biggest guys from the gym. They knock on the tenants door (I also provide a key). They ask what the old tenants are doing here and show them a lease with the gym rats names on it. They demand the old tenants leave and even offer to help by putting the stuff out on the curb. Very effective, the courts not so much.
No! Not if time saving and ease of obtaining a meaningful edge is a top priority. One can have a nice longterm stock investment by simply investing in one or more very low cost ETFs and hold for 30-plus years, as Buffett has recommended. Better, in my opinion, is buying Warren Buffett's company Berkshire Hathaway and holding for 30-plus years. I am not advising people on the wisdom of investing in real estate and there are many ways to do this with advantage if you have the time and skill. I am saying that it is far easier and FAR less time consuming to smartly invest for the long term through stocks, since these seem to be critical criteria to you. _____ Warnings: With stocks, it would be prudent to expect your investment to lose over half it's value at least once durring a long time span. Be prepared to hold no matter how much the market may crash and add periodically as you come into more investment money, regardless. With real estate, one is often highly leveraged so it is easier than many think to go belly up if you do not understand things. It is easier for the unwary to fall prey to scams along the way. However, for the right people there are some good real estate tricks: A young person starts out by buying a three bedroom house and rents two. A good scout and negotiator finds desperate people on the verge of losing their property (or simply ignorant people) and picks deals up at a steep discount. Etc.. and so on.. For a smart 30-plus year stock investors, there are easy ways. But Doing Well Is Not 100% Guaranteed In Either.
Like any investment you need to ensure you understand and manage your risks. In property your risks are interest rate rises, over leveraging, non-payment of rent, damage to property and of course the time needed to manage people and your properties. Ensure you don't over-leverage, you can obtain insurance to cover non-payment of rent and property damage. Ensure you have a good team of maintenance people should anything go wrong. In stocks, the risks are more obvious and can be negated via adequate diversification and hedging. Half of my assets are in property which I rent out, I have pretty good leverage which provides a decent return on my initial investments (10% excluding capital growth) The other half of my assets are in actively traded stocks, via leveraged (CFDs), I'm adequately diversified (globally) and also hedged (long/short) Which is easier? The property portfolio provides a regular income stream, and growth of capital. The stock portfolio is purely for capital growth. Each took skills and time to learn the ropes, but together they have allowed me to retire at 46. In terms of time, property has spikes, i.e. when a tenant leaves, or if there is a problem. I do all this myself to keep costs down, plus I quite enjoy meeting my tenants and getting to know them, the majority are decent professional people who just want a home. For stocks, I've got automated processes to manage my portfolio, but I would say stocks is more time consuming than property since I'm always tinkering