Stocks and gold have limited track records as investments. Companies that report specific stock and bullion prices are for their own industries. Trillions of dollars are invested in stocks and gold. Why would someone compare real estate investing to investing in stocks or gold?
The main comparisons of these investment vehicles are divided into two categories. Let’s start by looking at what the long-term investment results have been for each of them.
Costs and risks for investing in each investment: Gold – In general, 100% of the purchased amount is required to buy gold, unless you use purchase options (100% risk of loss) or loan money. The risk in investing in gold is that it is a commodity and wild price fluctuations can result in more than the initial investment if the purchase is used. Shares – Generally 100% of the purchase price is required to purchase shares, unless margin is used and then 50% is required. The risk is 100% of the investment as many stocks are literally diluted in value. If it is limited, the loss may be greater than the initial investment.
- Real Estate Wholesaler – Done right, the amount of money needed to contract and sell a $100,000 property can be anywhere from $10 to $1,000. The biggest risk is the deposit amount in the wholesaler. How much money can you make per investment with a very small $1,000 investment and no credit?
- Gold – To invest $1,000 in gold, you can go to a coin show or jewelry store and buy gold coins under one ounce. If gold were to double in price, you would have slightly less than $2,000 left when you sell because of the spread between the buy and sell price. Profit = $1,000, but the question is, “Now what to do with the money?”
- Stocks – Investing this small amount of money is difficult but suppose you buy a particular stock under 100 or “under 100”. I’m not talking about penny stocks, at best, because of the history of pattern investing. So, if the stock doubles and you make a $1,000 profit; Next time you will be confused about what stock to pick.
- Real Estate Wholesaler – In this case, your $1,000 per home or up to 10 homes for $100 each. Our historical record in wholesaling properties is a net income of slightly over $16,000 per property sold.
If they don’t sell before our inspection period ends, we’ll return them to the seller so you don’t risk losing $1,000 or $100. If an investor were to deposit $100 for four completed (16,000 x 4) deals per year, the investment would have a return of ($64,000/$100) x 100 = 64,000%. Again, the biggest risk as a buyer is your escrow or active money deposit (EDM).
These wholesale trade results are not typical and may be extremely low in some parts of the country and high in others. The key to investing is to multiply and determine your risk of loss by a fraction of the total investment amount. Wholesale real estate offers the highest returns of any investment while also having the lowest risk aversion. If you’re not already bulking, check out the possibilities!