| Rental Property vs. Stock Market Investment Comparison | ||
| Common Stock (Traded Assets) | Real Estate (Non-Traded Assets) | |
| Capital Invested | $100,000 | $100,000 |
| Value of Asset Controlled (through leverage) | $100,000 (in rare circumstances up to $200,000) | Up to $1 million and beyond, over time, depending on loan terms, deposit requirement, and length of time property is held |
| Purchase Price | Market Price | Negotiable- may be found and purchased below current market price. |
| Market Efficiency | Supreme (everyone pays the same price for a given stock) | Very low (opinions of sellers, buyers, appraisers, and banks vary wildly resulting in great opportunities). |
| Potential for Value Improvement | None - Pray! | Renovation, refurbishing, etc. (Which may also be 100% deductible or depreciable). |
| When Can Appreciation Be Realized? | Upon Sale | At any point from re-leverage, refinancing, to sale of property. |
| Cash Flow During Holding Period? | Small dividends, if you're lucky | Monthly rental income. |
| Depreciation | Zero | On buildings, improvements, and chattels over accounting life. |
| Inflation Protection | Zero | Both rental income and sale price may be indexed to current market, and value adjusted for inflation. |
| Return Upon Any Sale | Actual stock value | 1. May have compounding appreciation up to $1 million or more. |
| 2.Plus improvements (typically above and beyond cost of improvement). | ||
| 3. Plus any rental income. | ||
| 4. Less expenses. | ||
| 5. Less depreciation. | ||
| 6. Tax deductions. | ||
| 7. Hold > 366 days, profit taxed at capital gain rates. | ||
