Stocks & Bonds Vs Commercial Real Estate
Stocks & Bonds Vs. Commercial Real Estate
By: Nicholas A. Dunlap, CPM
Stock & Bond guys love to dog Real Estate. They see it as non-liquid and labor intensive. They see it as one headache after another, from roof leaks to angry tenants. What’s more, they lack the expertise to locate, identify and acquire real estate investments. In some ways, it’s like the Freeway Series in Los Angeles, the Subway Series in New York or the Battle of the Bay in Northern California. Rival investment counselors battling for capital. While most articles or interviews will feature a Stockbroker discussing why rather than purchase a rental house or condominium, an investor should purchase shares of multiple companies in order to diversify, these figures of comparison are irrelevant with the exception being that both are investment vehicles.
Sure, allocating equity to invest in shares of stock that require minimal decision making or maintenance can be seen as preferable over time to investing in a labor intensive project that can sometimes feel like a second job. However, Stock Brokers are not telling you the whole truth and are deliberately excluding the more potent investment vehicle. That investment vehicle is the lost art of private placement syndication. Yes, the group acquisition of commercial real estate or pooling of equity with likeminded investors to acquire a larger asset producing greater income.
I am working on an article to for the Wall Street Journal that will summarize the 12 round prizefight between the two investment vehicles and clearly crown the real estate investment partnership the champion. Stay tuned…