make your case: Stocks vs Rentals

[Casey Mayton]

Read through the forums but looking for current advice on a strong argument for choosing rentals over non-qualified stocks over the long term. The biggest differences I can see would be the rental 1031 to avoid taxes as you scale bigger, whereas NQ stocks would pay taxes each time they're sold. However, even with leveraging 75% money after the down payment, stock returns seem like they could make much higher returns. Of course it depends what stocks, but even some "high quality" stocks like Amazon can have 10,000% growth in just 20 years. I think both options provide a tax free step-up in cost basis at death, so they seem them being equally tax and legacy friendly that way. 

The top benefits I see to both would be:

stocks- much simpler to manage and liquidate stocks vs rentals and higher ROI even without the leverage
rentals- income offset by taxes/depreciation and 1031 exchange for tax free liquidations

Would appreciate if someone could make a very strong case that I'm missing, for rentals beating the simplicity and returns of stocks. Thank you!!

[Account Closed]

Originally posted by @Casey Mayton:

Read through the forums but looking for current advice on a strong argument for choosing rentals over non-qualified stocks over the long term. The biggest differences I can see would be the rental 1031 to avoid taxes as you scale bigger, whereas NQ stocks would pay taxes each time they're sold. However, even with leveraging 75% money after the down payment, stock returns seem like they could make much higher returns. Of course it depends what stocks, but even some "high quality" stocks like Amazon can have 10,000% growth in just 20 years. I think both options provide a tax free step-up in cost basis at death, so they seem them being equally tax and legacy friendly that way. 

The top benefits I see to both would be:

stocks- much simpler to manage and liquidate stocks vs rentals and higher ROI even without the leverage
rentals- income offset by taxes/depreciation and 1031 exchange for tax free liquidations

Would appreciate if someone could make a very strong case that I'm missing, for rentals beating the simplicity and returns of stocks. Thank you!!

Why do you have to choose? How about Stocks AND Rentals? 

EDIT: Just read some of the responses and while I get this is a REI board the sheer nonsense posted about stocks is amazing. Like every stock will lose money over 30 years! Or stocks are speculation and REI is 100% sure profit. What total and utter CRAP.

Stocks via ETFs and Mutual funds allow you to literally own a piece of the entire market. What equivalent vehicle exists for rentals? Sure there are REITs and Syndications but these are tiny compared to an S&P 500 or global market fund. And stocks have close to ZERO transaction costs and second to second liquidity. You can buy with very little capital and add small amounts regularly. You can leverage (via margin) and you can borrow against your brokerage holdings. So not that different from real estate.

Dont get me wrong. I own real estate but also own index funds and stocks. There is a place for both in any diversified portfolio.