Where to invest: real estate vs cryptocurrency?

What is the best place to invest your money in? It’s challenging to choose between stocks, crypto, real estate, and forex. The buzz lately is between real estate and cryptocurrency. Choose one or Choose both? Where can you get more income, what is less time-consuming, and which is easier to handle? And most importantly…Are they both investments?

Let’s consider the advantages and disadvantages of both.

Real estate investing

Real estate investing is an old sure way to get rich. Just check the list of billionaires and you find out that most of them are real estate investors. But what should you know before you start investing and what are the benefits?

• Unlike invisible cryptocurrency, real estate is a tangible asset. You can touch it, drive by it, brag by sending photos of it, collect rent, live there, demolish it and even bring your mistress there :). Also, It cannot be hacked or stolen without further consequences AND you can insure it from any hazard;
• Real estate is a good way of gaining a stable income from the monthly rents. A constant cash flow is an excellent reason to invest in property;
• Real estate is a good shield against inflation. The rental prices usually increase along with house prices. While inflation and the cost of living go up, real estate investors can maintain their income on the same level.
• Tax benefits are another pros of investing in the property. Moreover, real estate investors pay significantly reduced overall taxes as insurance, commissions, repairs, and depreciation become the tax deductions.

However, there’s nothing perfect, so cons are also taken into account.

• The first con is the high transaction cost. The property is very expensive by itself; an investor should also pay for appraisal fees, closing costs, taxes, HOA fees, and property taxes.
• Liquidity! When the investor wants to sell the property at a market price, it might take some time to do that, it becomes hard to get the full amount of invested money back to you. However, if you rent it out, you’ll get cash in your pocket on a monthly basis until you manage to close the deal.
• High maintenance cost is another disadvantage of property investing. Whether you have tenants or not, maintenance cost is high
• Cyclical nature and a long-term horizon are the final cons. Real estate might not increase in value as rapidly as stocks or crypto but it does show signs of stable growth with every passing year. That being said, LBC Capital Income Fund, LLC Income Fund, gives use ~8% of the annual return with monthly distributions on your investment.

Cryptocurrency investing

Some say cryptocurrency is just another trend that will pass in a decade or so, and others say it’s a new-age innovation that will change the world economy. Where is the truth? Let’s consider the main pros and cons.

What are the pros of investing in crypto?

• Unlike real estate, cryptocurrency has high liquidity — you can sell it as fast as you need money; There are also futures that can be hedged with.
• Investing in Bitcoin, Ethereum or any other cryptocurrency is much easier than investing in real estate. You can invest as much or as little money as you want, and it’s elementary to invest or trade with crypto on a secure crypto lending platform.
• Talking about BTC, since there are only 21 million bitcoins, there is no inflation at all, but volatility, volatility, volatility.

On the other hand, there isn’t anything perfect, so let’s see the pitfalls of investing in cryptocurrency:

• There still aren’t that many places where you can buy things with crypto, in most countries it cannot be used in everyday life. So it’s only a virtual asset that people can’t really use, but exchange it for cash value and back.
• Malware, hacking, and other scams and frauds have started to appear in the crypto world, so you have to be extremely careful while operating with your assets.
• There’s no support like in other regulated institutions. If you forget your private key or send money to the wrong wallet, your funds will be lost forever.
• Significant volatility is the biggest con of cryptocurrency investing. In 2017, the value of Bitcoin shot up from $1000 to a peak of $19,783 at the end of the year. Less than six months later, the value went under $7,000 and just recently went above $60,000, and it dropped again to ~$30,000 in a matter of one month.

Summarizing the information above, we can conclude that there’s no right and wrong investment. Everything has its pluses and minuses, but like Kathy Fettke, Co-Founder and Co-CEO of RealWealth said:
“Real estate is like Jack and the Beanstalk’s goose that lays golden eggs. It’s something that pays you month after month, whether you are working or not.”

Indeed, real estate is the most reliable investment and a great way to generate passive income. LBC Capital Income Fund, LLC Income Fund guarantees a stable yearly income of 8% with monthly distributions, which are secured by high-grade residential and commercial real estate. The Fund originates, underwrites, and finances loan transactions on highly-quality real estate properties.

Should you have any questions about investing in real estate, contact our manager at (323) 459-9065