Real Estate Investing vs. the Cryptocurrency Craze

What should you be investing in?

Choosing the right place to invest your money can be hard. As a real estate investor and coach, I teach my students how to invest in real estate to build wealth and passive income. Real estate is just one of the many ways a person can invest their hard earned money. Lately, many people have been looking to invest in new technologies like cryptocurrency. If you’ve been debating about investing in cryptocurrency and are curious on how it compares to other investments like real estate, here is some information you should consider.

What is Cryptocurrency?

Cryptocurrency is a form of digital payment that can be exchanged for items and services. Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology that acts as a shared immutable ledger across multiple computers. This technology facilitates the process of recorded transactions and tracking assets and makes cryptocurrency possible.

What are some benefits of using cryptocurrency?

Cryptocurrency cuts out the middleman. There’s a significant benefit in using cryptocurrency in business transactions. Typically, financial dealings, payments and transfers come with a number of fees and commissions. With crypto transactions, you use a peer-to-peer network structure. This eliminates the need for intermediaries. Not only does it save time and money, it leads to greater efficiency, clarity and a more transparent transaction.

What are some drawbacks to investing in cryptocurrency?

One very important reality about cryptocurrency is that it’s extremely volatile. The values can rise and fall at a moment's notice. Even a simple tweet from a well known celebrity has been known to affect crypto prices. Cryptocurrency is also relatively new so there are still some kinks to figure out as it pertains to cyber security. Since the currency is stored digitally, it’s at a risk from malware and hackers. In 2014 there was a hacking incident where approx $460 million worth of Bitcoin was stolen from Mt Gox as reported by Wired Magazine.

What is Real Estate Investing?

Real estate investing involves the purchase of a property, management of an investment or the rental and/or sale of real estate for profit. Real estate investing is a blanket term for investing in “real property.” There are several methods for investing in real estate and multiple types of real estate investments.

What are some benefits to investing in real estate?

Real estate investments are backed by tangible assets; physical structures or land. When you purchase an investment property you know exactly what you’re getting. You know the condition, the location and the overall value of your investment. Real estate investments can also be an excellent source of cash flow. Making the right investment can provide you with a continuous and reliable source of monthly income. There are numerous proven methods for maintaining a profitable RIO (return on investment) in real estate. Wholesaling, LYNK flipping, fix-n-flips, BRRRR investing, AirBnB Investing and Rentals are all great examples of profitable investment strategies.

What are some drawbacks to investing in real estate?

One of the issues people face when investing in real estate is the costs associated with a typical investment purchase. In most cases an investor will need access to some capital for their first deal. You normally need a down payment and closing costs to secure a purchase and depending on your plans for the property you may also need funds for repairs and updates. Another issue with real estate is the length of time needed to see a return on your investment. Real estate is a long term investment, even if you’re not a buy-n-hold investor, it takes time to buy, repair and sell properties. For most investors it's normal to only have a few real estate transactions each year.

Conclusion

So what’s the best option? In my opinion, real estate investing is a much safer option and generally a better option for your investment funds. However, that being said, cryptocurrency is the future and there is definitely money to be made in this new technology. If you have the capital, I see no reason not to diversify your portfolio and invest in both. The good news is, if you make money in crypto you can combine the two investment strategies and buy real estate with cryptocurrency for a win-win.