But real estate can be a useful tool in your arsenal as well. As our friend Passive Income MD argues, there is probably a place for real estate alongside your equities in your portfolio – for a variety of compelling reasons.
Of course, investing is different for everyone, and everything depends on your personal goals. But for wealth creation and achieving financial independence, I believe that real estate is the best and most efficient method out there.
There are stocks that pay off some small amount of dividends, but I discovered the portfolio size necessary to get a meaningful amount of cash flow with these dividends simply wasn’t practical.
Plus, they weren’t as predictable as the cash flow I was receiving monthly from my real estate investments. So I went about building up a real estate portfolio, using both direct ownership of properties and passive investing through private deals.
The world of real estate is very much an inefficient market. This means that although real estate prices seem to be dictated by the overall market, in reality, many investment property values are not bought and sold at their true value.
This differs from “market appreciation,” which is driven by overall market factors, like the global and local economy. It is based on comparables, and is simply not under your control as an investor. You can look at trends, but even those are unpredictable.