Real estate is just ONE way to get possible high returns. You do have to invest a large amount of cash and it can be difficult to sell property so it’s not a very liquid investment (although I have sold properties for all cash in two weeks). However, if you want to buy 100 shares of Amazon at $2,440 a share that’s $244,000!
The main advantage of investing in real estate is the ability to leverage your cash. While real estate only appreciates at a national average of 3.8% if you only put 25% down that’s an average return of 15.2% on your money compared to an average annual stock return of 10%.
In addition, there are many income tax advantages to owning real estate such as the ability to deduct mortgage interest, property taxes, management fees and other expenses of operating a rental property. PLUS, you get to depreciate the property sometimes resulting in an accounting loss which can possibly shelter other income. THEN, when you sell you could get long-term capital gains treatment OR exchange it for a much larger property while deferring the gain.
The main disadvantage of investing in real estate, besides the cash outlay, is that it requires a great deal of knowledge and expertise to do it successfully. Hiring an experienced real estate professional can help to overcome this hurdle initially until you learn how to do it yourself.