When it comes to finance, I started off my career investing in stocks, following the portfolios of some of the best stock investors of all time. Investors such as Warren Buffet, Charlie Munger, and Peter Lynch. I put everything i had in my savings into stocks. Every check I made, I put 50%- 75% of that into my investment account. After a year of buying tech stocks, retail stocks, and bank stocks, my portfolio grew about 12%. In total, I was able to save about $10k… The big idea was, if I save about $50k into one or a couple different stocks, I could potentially make $500 a month off of dividend income. But here’s some of pros and cons of making that decision.
Pros and Cons of Investing $50k in Real Estate for Dividend Income
| Pros | Cons |
1. Stocks are Extremely Liquid. Meaning you are able to sell you stocks immediately if you were in a sticky situation. However, in my opinion the best investor is a buy and hold investor. | 1. Most dividends do not come monthly, them come quarterly. Which means every 4 months you’ll get to your dividend payout. |
| 2. If the price of your stock goes up you earn money. So if you invested $50K and the stock price goes up 6% than you make $3k totaling $53K. However, if it goes down you lose 6% or more. | 2. To save up $50k, think about how much time that would take. A couple of years, realistically speaking. By that time you could’ve made a number of different investment. |
3. You can reinvest your dividends to earn you more money. This method is called compounding, where you’re money is doubling over the years. | 3. You may lose money big time, if the stock market goes down. Look back at the 2008 crash, everyone lost money, houses, and jobs. |
Referring back to this chart, there are companies that will continue to appreciate in price. But what will go up, may go down (click the link for examples). There are also companies that do pay monthly dividends. But if you were put $50k into one or two different stocks, how do we know how stable that stock is? Do you want to put your money at risk? If you’re a low risk investor, that would be the smartest decision. So I thought to myself what if I bought a condominium, and rented it out after a year of living in it? How much would I have to spend out of pocket to buy it?
To answer that question. Using the purchase price of $100k, the down payment and closing costs would come out to $9k. Let’s fast forward a year from after i bought my property.. The time has come for me to move on, and now i want to rent my unit out. I could potentially make $500 monthly, i would just have to rent out the unit for 30%-50% more than the actual cost of my mortgage payments but that is doable if you bought the property at a good price. On top of the monthly cash flow, you can ask for first months rent or last months rent. During the 2008 recession, one of the most stable investments were rental properties. The best part about real estate is that its in constant demand. Somebody’s always looking for a place to rent, just do your due diligence when you do choose your tenant. The most important part about investment properties is the guaranteed monthly rent check. While other investments such as commercial properties during a recession might be a lot more risky, a rental property still brings in a steady flow of passive income.
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Nice read, got me thinking about getting into real estate investing. Do you think that owning REIT stock does the trick?
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Thank you for reading 🙏🏾, REIT’s are definitely an easier way to invest in real estate, but you’re still following the market and you would have to own multiple shares to get a hefty dividend. When you purchase property you own the title, the deed, and you can do whatever you want with that. Set up an Airbnb, use it for rentals, use it as a home office etc.
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That’s true! The difficult part is getting the funds to buy real estate
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You can do anything you put your mind to. Just save, save, save and you’ll get there eventually! If you have any more questions about buying, feel free to ask!
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Thank you for the Nomination! 🙏🏾 Will be checking your blog!
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You’re welcome! Your blog is incredibly informative!❤️
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Well written and wonderful article full of information. Thanks for sharing such a great article with us:-)
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Thank you sir!
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Enjoyed the read! Definitely looking to add some real estate to my portfolio in 2020 or 2021. What are your thoughts on acquisition opportunities in the real estate market given the current conditions?
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Thank you Grant, yes likewise I want at least 5 more by next year. I think it’s a great time to invest, since rates are lower and there’s less competition. If you have a stable job or business, people should invest and choose tenants wisely. How about yours?
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I’m a fan as well. My business is stable to strong as of right now, so I’m excited to stockpile the current cash flow in the highest possible interest savings account until I can find a good opportunity. Five is a good target. I can’t wait to read about what you land! I’d personally be happy with my first 1 to 4 doors and I do think more opportunities will be made available to those with dry powder. As I’m sure you know, banks are raising lending standards and forbearance can’t hide financial misconduct or garnished salaries and wages from the looming economic downturn. No amount of stimulus can correct the damage to GDP that has already been made, but I know we will recover. From now until then, I’m eager to see what opportunities come across my desk!
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That’s great to hear, i hope you receive tons of opportunity during the downturn. What kind of business, is it that you have? if you don’t mind me asking.
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I run a small medical device business. I do mostly B2B and a little B2C through Amazon. My goal is to increase cash flow and attach it to a holding company that will pass through the cash to a real estate holding company. This will help me avoid double taxation and should protect me legally.
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Good Article on home investments. Do you know anything about purchasing with a 0% loan?
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Thanks and yes, those are usually USDA or VA loans. But I’m sure there are some Loan programs, to put no money down, out there.
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Good content. People have realized the importance of residential properties after the covid crisis both in terms of necessity and returns. This is the only investment which can bail out when all others succumb to the situation.
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Yes it is, my tenants have been given me absolutely no problem during these times. Which proves that residential investments are the best investments.
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Great article. But diversification is a key to financial success.
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Thanks for the comment! Yup, there’s multiple keys to success. You’re more than welcome to do a guest blog on here!
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Wonderful Article you shared, Thanks for sharing.
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Anytime and Thank you 🙏🏾
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I really liked this. Thanks for sharing.
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Thank you and anytime!
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Wonderful Article you shared, Thanks for sharing.
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It’s really great content!!
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Very useful information! Thanks for sharing!
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Thank you!
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