It shouldn’t surprise anyone that I read a lot of financial websites and blogs. For some reason it seems that I’ve recently read multiple times about the comparison between stock market and real estate investments. More specifically, what I’ve read is usually something similar to the following statement:

Over long periods of time stock market returns outperform real estate returns.

The supporting data used to support such a claim is usually something like saying that the stock market averages around 8% while real estate only averages 3 or 4 percent (or pick your own numbers based on some past time period). On the surface, this seems like a pretty cut and dry conclusion, one that one person will say “it’s proven that a diversified portfolio generally beats real estate investments”. I can’t say that I agree with this statement, and wouldn’t say that it’s been “proven”, especially if it’s only “generally”.

This aside though, I don’t understand how one can think stock market investments will outperform real estate, especially diversified stock market investments, which usually means index funds or mutual funds. When these people think of real estate investments, they must only be concerned with the actual appreciation of the full value of the property. In this case, stock market returns may be higher. But I believe that most people would be and should be concerned with their actual returns.

When looking at real estate investments, the more important measure of your returns is better viewed as a percentage of the actual amount invested. For instance, if you put 20% down on a $100k property, then your actual cash outlay is $20k. If the property increases in value only 4%, it’s now worth $104k. This four thousand dollar increase is then a 20% return on your initial investment which is much better than what most people will attribute to real estate. You just can’t forget the effect of leverage on your investments.

And I haven’t even mentioned the benefits of the cash flow properties can produce and what’s known as Cash on Cash return. I’ll leave this for another post though. I just wanted to put my thoughts out there on this subject since I keep hearing that broad index funds and the like are supposedly so much better than real estate. Such a blanket statement just can’t be true.

So I’ve finally talked with a property management company and gotten an idea about their fees and how they work. Since this will be my first experience using a property management company, I’m excited to see how everything plays out. It sounds like I’ll be able to be pretty hands-off, and they’ll handle most everything. This obviously comes at a price, that’s to be expected. So here’s the basic rundown of what it’ll cost:

• $195 to market the property which includes putting it on the MLS, taking and processing applications, and screening the tenants before presenting them to me for approval.
• Once a tenant is accepted, the company takes the first months rent as it’s commission for finding and placing a tenant.
• Going forward, the property management company will take 11 or 12 percent of the rent depending on what the eventual rent price is. (I was hoping this would be cheaper, but I guess I’ll have to deal with it.)

So as you can see, it’s not exactly going to be cheap to have the property managed. On the other hand, I’m not going to have to manage it myself. While in the future I’d like to own more and more rental real estate, I don’t want to end up buying myself another job in the landlording field. So we’ll see how this first one goes, and I’ll keep you updated through the process

As I was deciding which school I was going to attend this fall, one of the options was in Austin, Texas. Like it is with any move, the biggest concern is probably where you’re going to live and how you’re going to make the sometimes complicated transition from one place to another. So if you’re going to be moving to or from the Austin area, you might want to check out the Austin Texas realtors at Goldwasser Real Estate. They were recently recognized as the number one real estate sales team in the Austin area by the Austin Business Journal.

It’s been in the media recently about two of the largest retailers, Sam’s Club and Costco, limiting the number of bags of rice that people could buy. With the current state of the economy, I can understand how this would make the news, but I’m not sure why people are making such a big deal about it. It’s not the first item that has had a limit placed on its purchase.

The restriction was only placed on “specialty” varieties of rice, and it was limited to four 20-pound bags. From the perspective of the average American consumer, I’m not sure what the big deal is. Who really needs to purchase 80-pounds of rice? I can see the impact to some small businesses who usually purchase large quantities, but it’s now just an inconvenience to have to go through the checkout a couple of times if that’s what it takes.

These are also the only two stores that have put restrictions on rice. You can still buy all you want at Wal-Mart or any other retail outlet. So don’t let something like this add to your worries about the economy. It isn’t anything worth fretting about.

The now infamous tax rebate checks that everyone has been talking about were originally scheduled to start going out on May 2nd, but the Treasury Department has instead decided to now start the distribution this coming Monday. 800,000 checks per day will go out on Monday, Tuesday and Wednesday. Nothing will go out on Thursday, but another 5 million will go out on Friday. This is almost a full five days earlier than originally planned.

Apparently the payments are going out sooner than expected because of some newer computer program that updates records daily instead of weekly like the older one did. I find it a little odd that this is supposedly the case, especially since I think they would have known about this well before today. Whatever the case though, I can’t really complain about the payments being made sooner than expected.

With one of my friends at work being a die-hard Cubs fan, I figured I’d tip the hat a little and mention a place where he and all the other Cubs fans can find awesome Cubs merchandise. The site is CubWorld.com, and it’s the the online outlet of the sports store located right across from Wrigley Field.

As you might expect, they carry everything Cubs from jerseys, shirts, hats, souvenirs, and of course the infant and toddler apparel. Everything on the site is pretty well organized and easy to find, and they even provide a toll free number to call if you have any issues or questions, something not a lot of sites have. Free shipping is also offered on orders over $99 as another benefit. And who knows, this could finally be the year for the Cubs.

1. With school this fall fast approaching, there are a lot of things that need to get done before then, not the least of which being the need to get our house rented out. I’ve been in touch with a property management company in the area, but the timing of moving ourselves out and someone else in will be interesting to say the least.

2. We’re going to be heading off to Dallas early next month to visit my brother who is now living there for the second leg of his rotation program at work. Since that’s where we grew up, it didn’t take a lot of convincing for me to decide to go visit. And while we’re down there, I’m really looking forward to eating at Pancho’s Mexican Buffet.

3. I’m planning an upcoming giveaway of another book, so you’ll want to check back soon to make sure that get an entry in. The contest will most likely be similar to the previous contest, so it shouldn’t be hard for anyone to win.