Safety & Security
In an analysis of returns on stocks, bonds, and real estate over the last 150 years, researchers found that rental properties offer the high returns of stocks coupled with the low volatility and risk of bonds. That’s a winning combination.
Beyond being able to predict returns by forecasting real estate cash flow, landlords also have far more control over their returns than stock or bond investors. With stocks, for example, you buy and hope for the best. The only control you have at that point is when to sell.
But with real estate, you can actively lower your risk as a landlord, through aggressive tenant screening, landlord-protective lease agreements, and rent default insurance that pays the rent if your tenant stops.
Need more convincing? Here’s what more famous commentators say:
“Land is land, and it’s safer than the stocks and bonds of Wall Street swindlers.” – Eugene O’Neill, playwright
He raises a great point: you can evaluate and verify real estate’s value for yourself, but most people don’t feel confident that they can verify how a stock should be priced.
“Now, one thing I tell everyone is learn about real estate. Repeat after me: real estate provides the highest returns, the greatest values and the least risk.” – Armstrong Williams, entrepreneur
And of course an oft-quoted classic from FDR:
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” – Franklin D. Roosevelt, U.S. president
Track Record of Generating Wealth
I’ve said it before, and I’ll say it again: the wealthiest people in the world aren’t doctors or lawyers or middle managers climbing the corporate ladder. They’re entrepreneurs, and in a surprisingly high number of cases, real estate entrepreneurs.
Just ask the two most iconic billionaires in America’s history, starting with Andrew Carnegie:
“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.” – Andrew Carnegie, billionaire industrialist
And his contemporary, John Rockefeller:
“The major fortunes in America have been made in land.” – John D. Rockefeller, billionaire industrialist
Looking for someone a little more contemporary?
“A funny thing happens in real estate. When it comes back, it comes back up like gangbusters.” – Barbara Corcoran, real estate investor and media personality
Marshall Field takes it a step further:
“Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.” – Marshall Field, entrepreneur
Even conservative personal finance commentator Suze Orman loves real estate:
“Owning a home is a keystone of wealth… both financial affluence and emotional security.” – Suze Orman, personal finance expert and media personality
I rather appreciate Louis Glickman’s succinctness with his take:
“The best investment on Earth is earth.” – Louis Glickman, real estate investor
And finally, the Oracle of Omaha himself:
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” – Warren Buffett, billionaire investor and strategist
Where to Invest in Real Estate
Everyone has their own strategy when it comes to where to buy real estate. Some investors look for the cheapest real estate in the US. Others look for the cities with the best cap rates. Still others take a more nuanced approach, combining a range of metrics to find the best cities for real estate investing. (Guess which approach we recommend?)
Here are a few famous real estate investing quotes to bring even more perspectives to the mix.
“Find out where the people are going and buy the land before they get there.” – William Penn Adair, attorney and politician
But how do you know where people are going? John Jacob Astor has a tip:
“Buy on the fringe and wait. Buy land near a growing city!” – John Jacob Astor, real estate developer and writer
Our colleague Glenn Shelhammer likes up-and-coming neighborhoods, which haven’t fully gentrified and which might still see some Section 8 tenants.
“Buy real estate in a neighborhood where you might get shot, not one where you will get shot. That’s where the money is going to be!”– Glenn Shelhammer, agent and investor, Shelhammer Real Estate Group
