Real estate vs stocks - LBC Capital Income Fund, LLC
Back to Blog page

Real estate vs stocks


The eternal question is… real estate or stocks? If cryptocurrency is just another trend, investing in stocks is as ancient as investing in real estate. However, there still is the question: what brings better profit?

Investing in Real Estate

Many famous people such as John Astor, Donald Trump, Donald Bren became billionaires through owning real estate. How to become one of them and what issues сan you face?

Let’s start with the benefits.

  • Investing in real estate is an excellent tool for generating passive income. Suppose home buying is a challenging adventure. In that case, the basics are simple: Purchase a property, manage maintenance (and tenants, if you own additional properties beyond your residence), and attempt to resell for a higher value or get monthly rent pays. Also, owning a tangible asset (you can touch it) can make you feel more in control of your investment than buying fractions of ownership in companies through shares of stocks.
  • Investing with debt is safer with real estate. Also known as your “mortgage,” you can invest in a new property with a 20% down payment or less and finance the rest of the property’s cost. Investing in stocks with debt, known as margin trading, is extremely risky for experienced traders. By the way, if you are into real estate and need financing, LBC Capital Income Fund, LLC is a top hard money lender in California. We’re ready to cover up to 75% LTV and close the deal within seven days!
  • Real estate investments can serve as a hedge against inflation. Real estate ownership is generally considered a hedge against inflation, as home values and rents typically increase with inflation.
  • Tax advantages. Real estate investors pay significantly reduced overall taxes as insurance, commissions, repairs, and depreciation become the tax deductions.

If you want to invest in real estate with the LBC Capital Income Fund, LLC Income Fund, you can earn a stable yearly income of 8% with monthly distributions secured by high-grade residential and commercial real estate. The Fund originates, underwrites, and finances loan transactions on highly-quality real estate properties.

However, everything has its own disadvantages. So what are the cons of investing in real estate?

  • Real estate investments require more work and time than investing in stocks. Owning properties requires much more sweat than purchasing stock or stock investments like mutual funds.
  • Real estate is costly and highly illiquid. Even when borrowing cash, investing in real estate requires a considerable upfront investment. Earning money from a real estate investment through resale is more complicated than buying and selling stocks.
  • Real estate has high transaction costs. A real estate investor should expect to pay high closing costs, such as appraisal fees, closing costs, taxes, HOA fees, and property taxes.
  • It isn’t easy to diversify your investments with real estate. Location is one of the most important factors when investing in real estate. Sales may fall in one area, while values burst in another. Diversifying the purchase of real estate properties by location and type (a mix of residential and commercial, for example) implies much deeper pockets than the usual investor has.

Investing in stocks

Stocks are another leader in the world’s financial arena. Investing in stocks reminds investing in cryptocurrency – you never know what you will get in the end; it’s like a lottery – you can win a million or lose everything. So, it also has its own benefits and pitfalls; let’s see what they are.

The pros

  • Liquidity. While real estate investment can be locked up for years, the purchase or sale of public company shares can be made the moment you decide it’s the right time.
  • There transaction fees (if any) are much cheaper than real estate. While you’ll need to open a brokerage account to buy and sell stocks, the fees are reduced to $0 in most cases.
  • You can boost your investment in tax-advantaged retirement accounts. Purchasing shares through an employer-sponsored retirement account like a 401(k) or through an individual retirement account can let your investment increase tax-deferred or even tax-free.

The stock market is subject to several different kinds of risk: market, economic, and inflationary risks.

  • Stock prices are much more volatile than real estate. The prices of stocks can grow and drop much faster than real estate prices. Also, volatility can be caused by geopolitical and company-specific events.
  • Selling stocks may cause payments of a capital gains tax. You will have to pay a capital gains tax when you sell your stocks. However, If you’ve held the stock for more than a year, you may qualify to pay taxes at a lower rate.
  • Stocks can trigger emotional decision-making. While you can buy and sell stocks more easily than real estate properties, that doesn’t mean you should. Investors tend to sell when markets are more volatile than usual when a buy-and-hold strategy typically produces greater returns. Investors should take a long view of all investments, including building a stock portfolio.

So, is there a right or a wrong investment? It’s up to you to decide what is better. However, if you choose to stick to real estate, LBC Capital Income Fund, LLC Income Fund is a great tool to reach your goal of getting a solid financial ground.
Should you have any questions, contact our manager at (313) 459-9065.

Let's start together!

Sign up for a consultation

Embarking on your investment journey with us is easier than ever. Simply fill out the brief form below, sharing a bit about yourself. This will enable us to tailor investment options for you, address any questions you may have, and kickstart the growth of your wealth!

    Get in Touch