Property Management Blog

Why You Should Invest in Real Estate Over the Stock Market

System - Thursday, February 1, 2024
Property Management Blog

Among the popular routes to generating wealth are through the stock market and real estate. Both these ways can help you attain financial freedom but each option will entail a different type of commitment. 

As an investor, it is crucial to understand the benefits of investing in real estate and the stock market. Before making any decision, you should compare both the options to ensure that you choose a profitable one.

In this article by SGI Property Management Phoenix, we will look into the reasons to choose real estate over stocks, helping you make informed decisions. Keep reading to learn more!

Reasons to Invest in Real Estate over Stock Market

More Potential to Earn a Consistent Income

Investing in real estate in an excellent location can result in earning a stable income. Managing these rentals can boost your finances, especially in high-demand neighborhoods. Although it may take a while to earn a profit, rental properties are categorized as assets since they appreciate over time. 

You can also choose to purchase land and hold it until economic conditions and market demand are favorable to property sellers. Meanwhile, investing in stocks reduces cash flow opportunities available in property investments. 

To earn better stock investment yields, you must hold onto them for a long time before selling them off. However, this is also dependent on the market conditions since you can only profit if the value of the stock rises.


Some may argue that dividends can be earned from stock investments. However, these dividends seldom outpace the profits generated by renting out properties.

Outsourcing property management

Owning a property and renting it out requires you to fulfill various responsibilities. Some of these property management tasks include advertising your rental property, screening tenants, collecting the rent promptly and conducting regular property maintenance.  

The great news is that as an investor you can opt to hire professional property management companies that can help streamline your rental operations. Whether you’re a long-distance landlord or a new landlord, SGI Property Management Phoenix can help you manage your properties!

On the other hand, stock investors can engage the services of a mutual fund manager to handle their stock investments. The downside is that these fees tend to be higher compared to property management fees.

Volatility is Extremely High For Stock Investments

Another advantage of investing in real estate is that properties are safeguarded from inflation since real estate appreciates after several years, making them more valuable assets. You can also set a higher rental fee in the future when inflation hits, maximizing your income.

In comparison, stock market investments can be risky given that prices can fluctuate heavily. What may cost you $100 may reduce in value at a lower price in the future. As an investor, picking the right stock is vital given the risks involved. 


Short-term investors may find themselves experiencing financial losses. That’s why, opting for real estate investments is generally safer since their values tend to be solid over time.

Appreciation Over Time 

Related to the reason mentioned above, investing in properties can be safer since the value increases through appreciation. Real estate investors profit more when they hold onto property investments longer since property values increase after several years. 

If you compare the property prices from decades ago, they were generally lower than present prices. Planning to construct rental units can also lead to more income from rental proceeds. Adding upgrades regularly also ensures you can increase rental fees.

Tax Deduction Benefits 

Real estate investors can access tax benefits from mortgage interest payments and property taxes. Further, some of the costs of operating a rental property can be written off, such as property management fees and property maintenance and repair fees. 

Meanwhile, stocks don’t have tax reductions except when tied to retirement account contributions and charitable donations.

Real Estate Capital Gains Tax

When you decide to sell off your stocks, you will be required to pay the capital gains taxes automatically, whereas, in real estate investments, you are allowed to pay them at a later time. 

This is allowed when you buy a similar property after the sales transaction. This process is termed 1031 Exchange where you can replace a property over another to hold off the capital gains tax payment.


Below are examples of properties that are permitted for a 1031 Exchange:

● Swapping raw land with an apartment tower

● Replacing a ranch for oil and gas royalties

● Exchanging a real property for a residential or commercial rental space

Bottom line

Investing in stocks and real estate can lead to good returns but like all investments, both carry risks. But compared to stock investments, real estate investments offer more advantages to investors. 

The risks are lower and the earning potential is higher. You can also opt to diversify your portfolio, making real estate investments proven to increase financial success.

If you are looking for a reliable property management company, contact SGI Property Management Phoenix today! We are a dedicated team that helps you make smart real estate investment decisions.