Stocks and gold as investments have specific documented history. Companies that report specific stock and bullion prices are industries unto themselves. Trillions of dollars are invested in stocks and gold. Why would anyone compare real estate wholesaling to investing in stocks or gold?
The main comparisons of these investment vehicles fall into a couple of categories. Let’s start by looking at the results of a long-term investment in each.
Cost and risks of investing in each investment: Gold: 100% of the amount purchased is generally required to purchase gold, unless leveraged through call options (100% risk of loss) or borrowed money. The risk of investing in gold is that it is a commodity and there can be sudden price changes that cause more than an initial investment if the purchase was leveraged. Stocks: 100% of the purchase price is generally required to purchase stocks, unless margin is used and then 50% is required. The risk is virtually 100% of the investment, as the value of many stocks has literally dissolved. If you are on margin, the loss could be greater than the original investment.
- Wholesale Real Estate – If done correctly, the amount of money required to contract and sell a $100,000 property could be anywhere from $10 to $1,000. The maximum risk is the amount of the deposit in the wholesale sale. How much money can you make on each investment with a very small investment of $1,000 and no credit available?
- Gold – To invest $1,000 in gold, you would likely go to a coin show or jewelry store and buy less than an ounce of gold coins. If the price of gold doubled, you would have a little less than $2,000 when you sold because of the difference between the buying and selling price. Benefit = This. $1,000 but the question is “what to do with the money now?”
- Stocks: It’s hard to invest this small amount of money, but let’s say you bought a “loose lot” or fewer than 100 shares of a specific stock. I won’t talk about penny stocks because of their patchy investment history at best. So if the stock doubled and you made a profit of $1,000; again, he would be faced with the dilemma of which action to choose next.
- Wholesale real estate: In this case, your $1,000 would be an escrow on one house or up to 10 houses at $100 each. Our historical track record in wholesale property sales is a net income of just over $16,000 per property sold.
If they don’t sell before our inspection period ends, we return them to the seller so there is no risk of losing the $1,000 or even $100. If an investor made only four full trades ($16,000 x 4) a year Using a $100 deposit, you would have a return on your investment of ($64,000/$100) x 100 = a 64,000% return on your money. Again, the maximum risk as a buyer is your escrow or security deposit (EDM).
These wholesale results are not typical and can be extremely low in some parts of the country and high in other areas. The key to investing is to diversify and limit your risk of loss to much less than the total investment amount. Wholesale real estate offers the highest leverage on any investment while also having the lowest risk aversion. If you don’t sell wholesale yet, check out your possibilities!
