Of these 2 REOs, which would you pick?

[Jordan L.]

I've got two homes I'm eyeing. Both built in 2005. Location the same. One's 1900 sq ft home selling for 190k. Will definitely rent out for $1500 a month. Another is 2950 sq ft home selling for 220k. Will definitely rent out for $1700k but if you're willing to wait a month, you might get up to $1900.

While I know neither of the 2 fit the 2-50 rule, and not even close, if you had to, which one would you do?

[J Scott]

Originally posted by Jordan L.:

I'm also not 100% sure that stocks will go up, but that lack of certainty doesn't keep me out of stocks.

There's a huge difference between stocks and real estate, and if you haven't considered that, perhaps you should slow down and think about it for jumping head-first into either market...

Stocks will never cost you more than your original equity investment (as long as you don't short), whereas real estate can cost you much more than the purchase price of the asset.

Maintaining stocks requires no support on your part, whereas real estate will require at least some time and effort. If you believe your time and effort has value, then the cost of real estate goes up the longer you hold it.

It's much, much easier to diversify in the stock market than it is to diversify physical real estate holdings; additionally, it's difficult to hedge a physical real estate investment with other real estate investments, though hedging securities with other securities is fairly straightforward.

Stocks are much more liquid than real estate. If you ever find you need the cash for any reason, you can liquidate securities much more quickly and easily than you can liquidate real estate. Additionally, the cost to liquidate securities is minuscule compared to the transaction costs associated with liquidating real estate.

Look, we've given you all the advice we have to give. You're a big boy, and as long as you're comfortable with your investment decisions, that's all that matters. Nothing we say is going to change anything, and in a few years, either you'll be making lots of money/equity or you'll be regretting your investments...as long as you're willing to live with either of those outcomes, you certainly don't need to be defending yourself to us...