1323 8th Ave, Lehigh Acres, Florida 33972

I own real estate and stocks.  I’ve made money in both.  If I can do it over again, I would buy only stocks.  Here’s why.

  1. Stocks outperform Real Estate
  2. Capital Gains Tax (excluding principal residence)
  3. Hassle
  4. Costs


As explained in my article “TOP 4 REASONS TO INVEST IN STOCKS“, stocks outperform real estate significantly, despite the major stock market crashes.

There is empirical evidence of this. The richest people in the world (Bill Gates, Jeff Bezos, Warren Buffett) made their money from ownership of businesses. The richest real estate investor does not come close.


Let’s say you made $100,000 capital gains on an investment property and another $100,000 capital gains on a stock. Now you want to cash in some of the gains. You cannot sell a portion of the real estate property. You cannot sell half of a house. You must sell all of it. This means that you will realize all $100,000 of capital gains.

If you want to cash in on some of the gains of the stock, you can sell half of it or 1% of it.  Let’s say you sell 20% of it per year, over 5 years.  This means that you will realize 20% of your capital gains per year and your taxable income will be lower.  Not only will you pay less absolute tax in each year, you will pay a lower percentage in tax.

As an example, if you had $100,000 of income in one year, your tax rate might be 35%.  If you had $20,000 of income in one year, your tax rate might be 5%.  In the first scenario, you would pay $35,000 of tax.  In the second scenario, you would pay $1,000 X 5 years = $5,000 of tax.


Stocks do not phone me and ask me to repair the toilet. Investment properties do. I get calls on a regular basis about the toilet, oven, fridge, dishwasher, laundry machine, dryer, air conditioning, garage door opener, roof, etc.

My stocks never bother me.

I’ve had 3 tenants who moved in, paid 2-3 months of rent and stopped paying. Luckily, two eventually moved out on their own accord after living 2-3 months rent-free. I had to hire a lawyer to remove one of them. I lost money on all three tenants, but the one who I had to evict, cost an extra $3,000 to $4,000.

One time, my real estate agent, who got me one of the delinquent tenants, spent a few months trying to find another tenant but had not found one. In the meantime, she squatted in my property. The agent and her boyfriend thought they could get away with it because I do not live in the same city. I found out by getting a person from the HOA to look inside the home. I had to threaten to get the sheriff to evict the agent. She and her boyfriend moved out, but left unwanted furniture and trash behind, with scratches on floors and walls. I had to pay a company to remove all of this stuff and another company to make the repairs and clean up.


The broker fee is $10 or less to buy or sell stocks.

The broker fee is between 1% to 2.5% to buy or sell a house. Some may argue that the buyer does not pay a fee. This is not true. If the seller did not have to pay 1% to 2.5% to the buyer’s real estate agent, the buyer would have saved that from the price.

If you buy $400,000 of one company’s stock, the broker fee is $10. If you buy a $400,000 house, the broker fee is $4,000 to $10,000.

The round trip (buy and sell) can cost 2% to 5%. Therefore, the house must appreciate by 2% to 5% for you to break even. If the house price stays flat, you lost 2% to 5%.

This does not include the cost of home inspection, land transfer tax and legal fees, which will add a few more thousands of dollars.


Many people cite that real estate has lower price volatility. However, I really wonder if this is the case. Does it seem lower because you do not have people offering you a price every day?

Look at Zillow’s price chart for 727 NW 2nd Ave, Fort Lauderdale, FL 33311 below.  On Jan 2010, it was $164K. On Jan 2012, it was $110.8K, a 32% drop. On Jan 2016, it was $166K, a 50% increase.

Zillow price chart

Zillow price chart 2

Zillow price chart 3

Here is Zolo.ca’s price chart for Markham, Ontario below. On Nov 2018, it was $899,103. On Feb 2019 (3 months later), it was $805,131, a 10% drop. On May 2019 (3 months later), it was $947,141, an increase of 18%. On Jun 2019 (1 month later), it was $875,553, a drop of 8%.

Markham house price chart 1

Markham house price chart 2

Markham house price chart 4 Markham house price chart 3

Markham house price chart 4

Even though one can check Zillow’s or Zolo’s price charts, most do not. Whereas people check their stock prices much more often.


Some will argue that the advantage of owning real estate is that the tenant will pay your mortgage. That is not completely accurate.

You will have to pay for the following that the tenant does not:

  • property tax
  • insurance
  • repairs
  • maintenance (lawn mowing, snow removal, hedge cutting, etc.)
  • real estate agent fee to get new tenant or to renew lease
  • cleaning after tenant moves out
  • HOA or condo fees
  • property management fees (or your time if you not use one)
  • your time to pay, take care of or make arrangements for the above

Even though you might be able to use some of the rental income to pay your mortgage, much of it is paying the interest, not the principal.

Quite often the profit from rental properties is a few percentage points and not that different from the dividend yield of a stock.


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