Should You Buy Real Estate as an Investment?

It can be scary for many investors to have 100% of their money in the stock market, so it could be a smart idea to explore some alternative investment types like real estate. In this Fool Live video clip, recorded on July 14, contributors (and real estate investors) Matt Frankel, CFP, and Toby Bordelon, along with Brian Withers (who is 100% invested in stocks), discuss whether real estate could be a good investment choice for people looking to diversify.

Brian Withers: I wanted to hit Dwight Shrute’s question. It says, “Guys, do either one of you invest in real estate also and how has that worked out?” I’m like you Dwight, I’m invested 100% in stocks. I don’t have bonds, I’m 100% in equities, but only get real estate FOMO from time to time, and I’m in my mid-30s. Matt, Toby, feel free.

Matt Frankel: Well, I’m the real estate guy. You can probably imagine how I would answer that question. I own a couple rental properties. I have a few long-term rentals in Columbia, South Carolina. We just bought our first vacation property. I said I love the Airbnb (NASDAQ:ABNB) model, people want flexibility, so we did that. Like Toby mentioned the commercial real estate, the crowdfunding platforms, I invested in one deal through them during the pandemic. I think real estate is a great way to invest, and really the way to go depends on how much involvement you want to have in your investments. I’ll shut up and let Toby answer, but I’m pretty sure that the main drive for the crowdfunding platforms as opposed to rental properties, it’s very passive. You pay, someone else is doing the work for you. You don’t have to be a landlord.

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Toby Bordelon: Yeah. That’s exactly right. My first foray in the real estate was a rental property in Georgia, which I still have with a partner, even though we have a management company doing that, but you still have to deal with it, you still get the call as you still have to, it’s not every day obviously, but it’s still an issue, it still creates some stress. Since then I’ve been more in the commercial side. Specifically for that reason that you put in your money, you get the reports, you want a bit much higher than that. All you have to do is think about where your next investment is going to be when this one is realized. I would say the thing to keep in mind about real estate it’s a lot less liquid, so you got to be prepared for that. You can’t just sell it whenever you want, even if you are 100% owner of a rental property, it still takes time to sell that. With the commercial real estate, you’re locked in till the manager sells that. There’s really not much you can do about it. But if you’re able to really take a long-term view, that is to say, I’m cool with locking up money for a couple of years, three to five years.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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