Ep. #96: How Does Real Estate Compare to Stock Returns?
Abstract
Wondering how real estate has performed over the decades, compared to stock markets? Deni and Brian break down average historical stock market returns along with average real estate returns to give you a sense for what you can expect from each asset class. Obviously, some years it has a negative return, some years it goes down, other years it has a spectacular return. You know, as a general rule, stock market returns, you can count on 8 to 11% as sort of an average long-term return on the stock market. It's hard to pinpoint one average real estate return if you own real estate properties directly, for example, being a landlord like you and I talk about all the time, then high returns depend on the individual deal, right? And that means that your returns on a rental property depend on your skill level as an investor, which is not the same as investing in, say, index funds in the stock market, which requires zero skill at all. If you buy a bad deal with leverage with, you know, financing most of the purchase price, you're going to go from a moderately bad return to a really bad return. To give you a sense for how those compare to both stock market returns and direct rental property investment returns. So again 8.4% annual return compared to the stock market's ten-and-a-half percent average return.
