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2011-10-28 18:57:16

5 Reasons Why Income Properties Are Better Than Stocks


1. Income Properties Are Controllable and Manageable

One of the best things about income properties is the fact that you are in control of your success. With the stock market, you are forever at the mercy of its well known fluctuations. The risk in the stock market is, and always will be, higher than it is in the income property market.If you need to be in control of the outcome, if you need to be in direct involvement with your investments, then income properties far outweigh any benefits that the stock market can provide.

Some people in the property market have decided to hire people called property managers. These people can handle the Lion's share of the workload involved with managing the property. This leaves the actual landlord free to purse more lucrative business ventures.

2. Income Properties Are Nearly Guaranteed Income

Income properties are wonderful for this. They are one of the most secure ways to invest your money, providing you perform your job as a property owner well. There is a lot that can go wrong with properties and that's why you have to have a trained eye for which properties are worth fixing up and which to leave behind. For example, it wouldn't be any form of a guaranteed income if no one is willing to rent your new house in the bad neighborhood. That's just an example, but if you're looking into the housing market then you should gain all the knowledge about the business that you can. This will circumvent a lot of difficulties.

3. Income Properties Nearly Guarantee Leverage

One thing many people with income properties do is use leverage to their advantage. As soon as a property owner makes a property worth enough, they use the appreciation of the home to purchase even more homes. In this way it becomes a sort of dynasty for the property owner. Let's take a look at an example. Let's say a property owner put the minimum down on a house that's worth $150,000. At a 7% rate of appreciation per year, in five years the house will be worth $202,500. The property owner sells the house for an amount of $202,500, making for a total profit of $52,500. Then, the property owner pays for the home and takes the $52,500 profit to buy another $50,000 home. Property owners simply put the minimum down on a home, fix it up, and then let the profits accrue. This is just one example of leverage with income properties that you can't do with the stock market.

4. Income Properties Have A Lot Less Taxes Than Stock Market Investments

Not only that, but some states have lower taxes than others. Wyoming has the lowest property tax rates in the United States. On the opposite side of this coin, however, is something you should be on the lookout for. While it may seem like a good deal to seek some property in Wyoming, the appreciation rates on the homes are very low. This means that you won't get such a positive return on your investment over the years. However, in the grand scheme of things, when compared to taxes on stock market profits, income properties have much lower taxes. Finding the right combination of appreciation value and low tax rates will mean bigger profits.

5. Income Properties Are Less Volatile Than Stocks

Switching gears for a second, the stock market is a very volatile place. The value of stocks can soar and plummet with the flick of a switch. In the income property market, you don't have to deal with this uncertainty. The value of your income property will actually appreciate, not just go up and down according to the market conditions like stocks do. Volatility in finance is simply a measure of how the value of a financial investment varies over time. Income properties are less volatile than stocks.

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