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I wasn't able to download the PDF but I read the summary article http://voxeu.org/article/rate-return-everything http://voxeu.org/article/rate-return-everything
by mattnewport 9y ago
I wasn't able to download the PDF but I read the summary article http://voxeu.org/article/rate-return-everything http://voxeu.org/article/rate-return-everything
In the paper, do they attempt to take into account the costs of real estate investment over holding stocks when calculating total returns? Things like property taxes, maintenance, stamp duties, realtor fees, legal costs dealing with problem tenants, etc.? If not I wonder if those explain some of the mystery around real estate returns relative to stocks?
- pwthornton 9y agoNot to mention that real estate needs constant investment to keep it in working order and up to code. This is not the case with equities.
- eurg 9y agoThey use net returns (after operating costs etc., p.31), and provide an argument why leverage doesn't make a large difference (p. 40).
- asah 9y ago...and don't forget deal sourcing, tax prep - real estate investing is very labor intensive, vs stock market equities which is point/click and super easy. For institutional investors, this is easily amortized but individual retail investors should invest in REITs to avoid over-concentration in a single property.