STOCK MARKET OR HOUSING MARKET?
Which is less likely to crash in the next 5 years?
In this age of wealth inequality and economic instability, where should you invest your nest egg? In the next few paragraphs, I intend to show you why you will get the best combination of high returns and safety in the Las Vegas real estate market.
Billions of dollars have been made in the past several years on Wall Street, as the stock market climbs to ridiculous new highs. But haven’t we seen this movie before? Before 2007, no one paid any attention to the concept of “sustainability”, but now….well, you can’t swing a dead cat without hitting a dozen people who know all too well what “sustainability” means to investing. Granted, I have a very bad track record and low level of knowledge (I thought Google was a ridiculous name and invested in cable TV instead), when it comes to investing in the stock market and am clearly biased towards real estate as the best investment. I think, however, that my bias is justified and correct.
I don’t trust the stock market right now at all! If I were investing money there, I would treat it like the casino that it is. As every smart Vegas resident knows, you don’t sit down at the tables with money you expect to leave the casino with. A true and healthy casino customer expects to spend a few hours playing games, meet some people, have some free drinks and leave all their money with the casino bosses. Every so often you walk out with more than you came in with and on rare occasions, you hit big and walk out with some serious money….but for the most part, you are not the winner, the casino is!
Do you really want to take your hard earned savings and walk into the Wall Street Casino? Is their recent, incredible rise in value truly sustainable? If you invested $100k tomorrow, what do you think you’ll have in three years? Five years? Seven years? Seriously, I’m not asking a rhetorical question, I really want to know, because I have no idea and would be scared to death to gamble that big.
For my taste, I go off strip, plop down a pair of Jacksons ($20 bills) at the $3 tables at “The Joker’s Wild” on Boulder Hwy and have an evening of fun. That is the extent of my gambling. My investment dollars are in Las Vegas real estate, where they are safe, well managed (by me) and bringing cash flow while they appreciate at a more reasonable and sustainable rate. That rate by the way, is a combined ROI in the mid teens (about 17% combined).
A read of my previous articles will tell you that our real estate market is not perfect and not without some concern. But I can make good, reliable predictions of what $100k, if invested here & now, would be in 3 years, 5 years and beyond. With the exception of the “perfect storm”, from which we’re still recovering, real estate has always been safe and often been VERY profitable. Yes, our market is pretty hot right now, but nowhere near as on fire as Wall Street. Besides, we’re still climbing out of the hole we dug for ourselves (see last blog). A hot market is not a surprise to anyone who’s been paying attention.
Las Vegas, like every other American city has its good and bad areas for investing. You can get some terrible advice and generally throw your money away. And what works in one city can be a looser in another. Apparently in L.A., duplex/triplex properties are all the rage and really doing well. I know this because I frequently get SoCal investors asking me for them here in Las Vegas. While it’s a great idea in many places, it’s not such a good investment here in Southern Nevada. We simply don’t have many and those we have are generally in bad, much older neighborhoods (where I don’t want to manage).
The factors which determine where your best investment dollar is spent on Vegas realty, are numerous and each have different weight/effect; Demographics, economics, schools, infrastructure, tourism, industry, regional issues and more, all factor into the proper analysis of what to do for you.
I admit that part of the reason I write these articles is to entice you to let me help you spend your investment dollars and then manage what we buy together. But I also do it to help educate you, so you will know what to ask for when you don’t take advantage of my services. I want you to expect more from your Realtor than other clients. When you expect more, your Realtor will do more and learn more. In the end, everyone wins!
So, stocks or Vegas realty? Which do you think is a better move? Which will provide the best mix of safety and profit? Or you can just keep your IRA/401k in super-safe mutual funds and crawl towards profit. You know my opinion, let me help you form yours.