In this interview, Ted will answer a frequently asked question, “Should I Invest in Real Estate or Stocks?”
You may watch the video above, or if you prefer, read the transcript below.
In “Should I Invest in Real Estate or Stocks?” the topics we’ll be discussing are:
- Investing in Real Estate vs. Stocks
- Alternative Real Estate Investing
- How to Mitigate Risk When Investing in Real Estate Tax Liens
- Learn Real Estate Investing in Tax Delinquent Properties
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Investing in Real Estate vs. Stocks
Investors can earn amazing profits in either the real estate or stock market, and Ted Thomas is not against stock market investing. However, Ted has decades of experience in real estate investing, including over 30 years of experience in alternative real estate investing, and Ted prefers real estate for the following reasons:
Real estate is far less volatile. Yes, the real estate market goes up and down, but it happens much more slowly, giving savvy investors ample time to spot the trend.
Real estate is tangible. You can reach out and touch your investment.
Real estate is under your control. Unlike with stocks, you aren’t at the mercy of a corporate CEO who may run your investment into the ground.
Real estate investing is less time consuming. Ted and his students are able to earn 6-figure incomes spending 7 to 10 hours per week doing property research. Stock market investors tend to spend much more time monitoring and researching the market.
Alternative Real Estate Investing
At a tax deed auction, you’re purchasing the property itself, mortgage-free and often at an amazing discount. The bidding starts at the unpaid property taxes, which can be 10, 20 or 30 cents on the dollar of the assessed value, and the highest bidder wins.
At a tax lien auction, you’re purchasing the tax lien against the property and the powers over the property that come with that, and you receive a tax lien certificate.
Tax lien certificates pay interest rates of up to 36%, and they’re backed by the local county government. The county ensures that you will either get paid, or you’ll get the property. 97% to 98% of the time, you’ll get paid.
How to Mitigate Risk When Investing in Real Estate Tax Liens
Even when you purchase a tax lien certificate, there’s a chance that you could end up owning the property. Therefore, you need to know what you’re buying. You must do your due diligence.
Most of the property research can be done online. However, you must go out and actually view the property or have someone else do it and send you pictures of it.
Online photos could be outdated, and you need to know what the current condition of the property is before you bid on it. This is why Ted always teaches his students to do boots on the ground research before investing a single cent in a tax defaulted property.
Learn Real Estate Investing in Tax Delinquent Properties
If you want to learn more about how to invest in tax delinquent real estate, view more of Ted’s free videos.
Ted is the authority on the subject and has been teaching tax lien and tax deed investing for over 25 years.
If you want to have a free auction list of tax defaulted properties that are currently for sale, go to TedThomas.com/freegift.
We hope you enjoyed “Should I Invest in Real Estate or Stocks?”
You can make money in both real estate and stocks. Should I invest in real estate or stocks? There is no right or wrong answer to that question. However, real estate market ups and downs move at a much slower pace.
Additionally, real estate is tangible, and you have more control over your investment. This mitigates a multitude of risks, and knowledgeable tax delinquent property investing reduces the risks even more.
If you’d like to know more, Click here to get started today!
Read the Video Transcript:
Invest in Real Estate or Stocks?
Randy: Thanks for joining us. We are here with Ted Thomas who, of course, is the authority on tax lien certificates and tax auctions and real estate. Hey, I’ve been wondering about this, Ted. Should I invest in real estate or stocks? When you invest in a tax lien, is that kind of like when I’m buying a dividend stock? I know a little bit about that. Maybe, can you compare and contrast the two?
Ted: Okay, well. you’re really coming around to some of the security issues, and payment issues and things like that.
Ted: First of all, I’m not negative on the stock market at all, but it does take a strong stomach, as you probably know.
Randy: Oh yeah.
Ted: Because the market goes up and down like that. I’m not saying that real estate doesn’t go up and down, but real estate goes up and down like a slow wave.
Ted: So we know a long time as it comes down, then a long time it goes up, but the stock market’s up and down. So people buy a dividend stock, at least that’s my guess. I’m not an expert in the stock market, but they buy it because they want to get a fixed rate of return. They want to know that they’re going to get a dividend.
Ted (cont’d): Well, tax liens will always pay you, because you have an agreement with the local government. The local government, whether it’s in Houston, Texas or Nashville, Tennessee or whatever state that you’re in, when you buy that tax certificate, you’re investing with the county. That means your money is protected by the property tax code.
Ted (cont’d): Now, that tax lien that you bought has a clock on it, and it’s going tick, tick, tick like the one on “60 Minutes.” The clock is just ticking. For example, in Florida at the end of two years, if they haven’t paid you, they’re going to start a process that you’ll get the property.
Ted (cont’d): If you were doing this in a place like Texas, they give them 180 days. If they haven’t paid you in 180 days, you own the property that quick. So this is a very safe, secure business.
Ted: Your security is the property. That’s why we say to always have boots on the ground. Take a good look at that property. Why do you want to look at it? You want to make sure value is there when you buy it.
Ted (cont’d): I’m not saying stocks don’t have value, but you have somebody else running the company. I don’t know what their social life is like. I don’t know whether they’re going to run the company into the ground. They might stop paying dividends.
Ted (cont’d): Everybody wants to talk about Warren Buffet. There’s only one Warren Buffet, but there are about 1700 or 2000 stocks that you could buy every day on the stock market. I don’t know which one. I don’t have time to follow them.
Ted (cont’d): So I just go to the tax auction, whether it’s to buy tax defaulted property or to buy tax liens. There’s a limited amount I can look at. I can go touch it, like I’m touching the table right now, and you can do the same thing. I’m a safe, secure kind of guy. I don’t want to waste money, and I don’t want to take risk. I hate risk so I want to go look at that property before I buy.
Ted (cont’d): Every video I make for my clients will end by saying don’t bid on a property unless you have boots on the ground, your boots, or someone you know, on the ground. What if there was a fire? What if there was a hurricane? What if there was a flood? So I want to check all of it. So I’m into the safety and security of it.
Randy: So it is possible to lose money when you’re buying tax liens. You’ve got to check out the property, but what’s the worst case scenario, just to let folks know.
Ted: The safest investment I know, I don’t know everything, but the safest investment I know is tax lien certificates. Because I invest with my local county, and they give me money back. 97% to 98% of all the tax liens will pay you. I go to the event. When I buy a tax lien, I go home and pray that they don’t pay, because I want to get the property.
Ted: This guy prays that they don’t pay the tax. That’s right, I pray. My clients do too.
Randy: Is there any one piece of advice you give, like the one big mistake to avoid.
Ted: The biggest mistake is people are too lazy to go look at the Property.
Randy: To do the due diligence. You’re talking due diligence here, right?
Ted: Listen, you won’t believe this, but I live in the middle of Florida, right on the coast, a little island. Okay, so I buy properties in Cleveland, Ohio. Cuyahoga County, Cleveland, Ohio.
Randy: I know the place. I live here.
Ted: Right. You know how I do that? I go online. I can see what the property is. Okay, I can see that, and I can figure out what the exit strategy is. I can have the satellite come down and look at it. I can do all of that. Then I say, I think I want to buy that. Oh, by the way, they’re going to have 30 of them. So I’ll go look at that.
Ted (cont’d): I’ll go over to the airport. I’ll get in two hours later, and I’m in Cleveland. I drive around and look at it and say, all right, I had my boots on the ground. I go back to the airport. I’m home that night. Guess what? I’ve looked at the property. If I didn’t do that, I’d hire a broker to go take pictures.
Ted (cont’d): Everybody’s got a camera in their pocket. You don’t know anybody without a camera. They’ve all got one in their pocket. Take it out, and take a picture of it. So, I don’t want to be involved in something that’s going to be a mess.
Randy: That’s great, and I know we did another video where Ted talked about the importance of boots on the ground and checking out the property. You can’t take it for granted. So very, very important to do. You can see these other videos at Ted’s website at tedthomas.com. Now Ted, tedthomas.com/freegift, what’s that free part?
Ted: You guys are going to like the free part because not only is there a lot of free video there, but if you want, we’ll get you a free auction list. We’ll get you one. We’re not going to get you all 3000, but we’ll get you one so that you can see an auction.
Ted (cont’d):I’ll show you an auction list right now. This is a county in New York. What county? Dutchess County, right up from New York city. This is an auction list. I printed it off the internet so you guys can see it. We’ll get you an auction list So you can look at all the properties. You’re going to see that some of these properties you can move into them tomorrow afternoon.
Ted: Now is there junk on there? Don’t buy junk. Junk is always going to be junk. So you are going to buy slightly used, then there’s some junk. There’s some. You just clean them up and sell them, or clean them up and live in them.
Randy: Yeah, and again, you’re already going to see some photos there. You know it’s funny Ted, before we sign off, I know you use Google to check out some houses to sell. Next time I get a sense of the Google satellite coming out over, taking pictures over my house, I’m going to hold a big sign that says, “Hey, Ted.” So be looking for that next time you’re looking in Cleveland, Ohio.
Randy (cont’d): Hey, meanwhile, why don’t you head to the website right now? Tedthomas.com/freegift. You’ll see what Ted’s talking about. A lot of good information there and a lot of other videos. Check it out.
Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.