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Seeking Post-Grad Advice

Discussion in 'Personal Finance' started by Mike B, Feb 18, 2017.

  1. Mike B

    Mike B New Member

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    Hello everyone,

    I have recently graduated college, found a stable job, and started to save up some money. Going forward, I am wondering how I should go about investing my savings. So far, two ideas come to mind. I can either invest in the stock market, or in the housing market.

    If I were to go with real estate, I was thinking of making a down-payment on a nice looking house in a popular or upcoming location. I would then rent out the house and hopefully match or exceed the monthly payments I owe to the bank. This seems very possible from browsing around Zillow and local houses in my area.

    I have read that on average, stocks have a slightly higher annual return that the housing market. However, it seems like I could leverage my money more effectively by buying a house. Therefore, could anyone lay out the pros and cons of each method? Also, these are just two ideas that come to mind. I'm sure there are plenty of other ways to invest as a post-grad. Therefore, any general advice or other investing opportunities would be much appreciated.

    Thanks in advance,
    Mike
     
  2. StockJock-e

    StockJock-e Brew Master
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    The past several years have been very good for the stock market, but property is a very solid, tangible investment.

    If you have the means, look into what it would take to buy an investment property, I think its a great idea if you are able to rent out a place, then possibly use profits from that to expand to more units.
     
    TomB16 and fireopal like this.
  3. Onepoint272

    Onepoint272 Well-Known Member

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    • You can be a farmer without buying a farm (futures), you can invest in real estate without buying real estate (REITS).
    • According to the likes of Harry Dent we're headed for a demographic induced collapse in prices; deflationary period, and all asset classes will collapse. Real estate prices take longer to adjust, but if you own the real estate you are locked into an illiquid investment.
     
    fireopal likes this.
  4. Value543

    Value543 Active Member

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    Greetings @Mike B -- small scale real estate investor here!

    I don't think anyone here can lay out the pros & cons for you. It's too individual of a question. For example: do you want to manage an investment property, or do you want to manage an equity account? If you want to do one or the other, than somebody's "con" could actually be a "pro" for you. Know what I mean?

    I got started very similar to what you are talking about. I bought a single-family home & rented it for several years. Thanks to Mr Market, some good fortune at work, etc I was able to then purchase a multi-unit "quadplex" if you will, essentially 4x small town homes all connected. In my opinion, if I could do it all over again, I never would've gone with the single-family home...the margin just isn't there, or at least it wasn't for me. Example, one year the AC/Heat unit had some issues, cost me an entire year's worth of profit to fix, so that year I didn't make anything. Meanwhile, I have pretty routine issues with the multi-family, but the margin is there to cover & profit.

    Take a hard look at what the gap is between what the Rent will be compared to the Mortgage + Insurance + Property Management Fee + Non-Tenant Costs + Etc. If you aren't clearing enough $$$ each year to cover something like a $1,500 - $3,000 single repair incident, then perhaps you should hold onto your money until you can spring for a multi-unit property.

    Just my 2-cents, which isn't even worth that much to be honest!
     
  5. Jrich

    Jrich Well-Known Member

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    I looked into real estate investing a long time ago... Even ordered some audio CD's online... That "no money down" thing, where they throw hair brain scemes at you like selling the trees to pay for the land (serious)

    Obviously, people make money in real estate, or they wouldn't do it... What turned me off, was being a renter myself.... I wasn't the best tenant, and I wasn't the worst.... But I had kids and dogs, neither of which have any respect for property

    The stock market has no carpet for dogs to pee on, nor any ceiling fans for kids to swing on
     
    Austin vanderweide and B Russ like this.
  6. Narnolia Securities

    Narnolia Securities New Member

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    The choice between investing in real estate or stocks is like choosing between eating a chocolate cake or a hot fudge sundae. Both are good provided that you don’t go overboard. When you are younger, investing in stocks is easier and makes more sense since you have less money and are more mobile. As you get older you probably want to set some roots so owning at least your primary residence is beneficial.
     
  7. Denis

    Denis New Member

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    They both are great ideas and anyone is good enough depending on your capacity to manage your investment choice.
    However, Personally, i'd rather both at same time if you have the capital.
     
  8. Kuznec

    Kuznec New Member

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    I would choose real estate, unlike the second option, it is almost impossible to lose all investments. There can be profitability and will be less, but also risks.
     
  9. sunshinebest

    sunshinebest New Member

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    Yes, there could be a lesser risk if you invest on a real estate than buying a stock. I think, you should identify what those risks are before investing.
     
  10. fireopal

    fireopal Well-Known Member

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    Have a couple friends that are doing/did this. One living here in US is doing more as a business but other had to do it because of move out of the country and his house was not selling. Things have been working out great for the one friend and renters are covering the bank notes but one living out of the country had to make a couple trips back due to bad renters and then house problems before his house finally sold.
     
  11. OldFart

    OldFart Well-Known Member

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    Read a book about 20 years ago that said the best way to get into renting is buying a quad, living in one unit and renting the other three out.
    There used to be steel kits that were pretty cheap to erect. Here's an example:

    http://m.kodiaksteelhomes.com/site/series/8
     
  12. Jonathan Wiley

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    So interesting to read the comments and find out the others experience.
    My personal opinion is that investments in real property include less risk, than investments in stocks. But you should remember that real estate is not so liquid as stocks. And it's the main disadvantage and reason to come to another investment side: stocks, startups, crowdfunding projects.
     
    fireopal likes this.
  13. Austin vanderweide

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    Great thread here. I am very interested in real estate as well as stocks. With the market being so high and myself being only 21 it seems real estate may be the way to go. I live on a college campus and I can easily satisfy the 1% rule--monthly rent is 1% of the total cost of the property.
     
  14. Ethan Scott

    Ethan Scott New Member

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    As far as my experience is concerned, instead of opting for post graduation I decided to start my own company by taking some money to expand my business. It's been two years since I have started and gaining profits so now planning to take a working capital loan. These two years have been a great learning experience which I could not have gained in a post-graduation. I interact daily with different people and get various ideas. These ideas help me to grow my business and I am really enjoying the work which I am doing. So you can think of this point as well before opting for post-graduation.
     

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