And Selection Process Equal Housing Opportunity Real Estate: Fill & Download for Free

Determining which investment is a better idea is entirely dependent on your own financial goals.Whenever you are considering any investment you have to first of all consider what your financial goals are, and start from what’s pushing you to invest in the first place.Sure, glancing at the surplus of cash and accumulated savings may prompt you to think about the potential returns that you could be generating and perhaps even be the first step in facilitating a passive income for yourself, but there’s a lot of things to consider.Let’s take the two asset classes you’ve described: stocks and real-estate, break down their key characteristics, describe what kind of investor they would be right for, and identify key advantages and disadvantages.Real-EstateReal-estate is not only a very interesting asset class, but owning a home represents an important milestone in one’s life. There’s no arguing that owning a house brings you a satisfaction and peace of mind that no other asset can ever. Money is ever fleeting if it’s parked in cash, but real-estate has utility beyond its market (or even numismatic) value. Getting closer to owning a house, debt-free, should be the goal of every investor – permitting they don’t already. However, let’s consider if you’re an investor that already owns a home, and is now looking towards the same asset class as an investor to generate returns.Advantages:Real-estate is a real asset; something you can feel and see. The biggest advantage is security by utility.Over the past 20 years we’ve seen several periods of financial market turmoil which have greatly affected asset prices; real-estate price are subject to fluctuation and will generally correlate closely with the overall economic performance. However, notably, these fluctuations are not as volatile as the price-action in the stock market. That’s not to say that real-estate prices don’t fall in declining markets – they do. However, whenever you bank on the stock market, you stake the performance of the company and their ability to generate future positive cashflows and value for the shareholders. Companies, as separate legal entities, can fail and many do – leaving the investors with close to nothing. When times are tough investors may be prompted to redeem a lot of unrealized gains and exit their positions. When everyone in the market starts divesting funds it causes the asset prices of the stocks to fall as the market fails to match buyers and sellers at the same price level; demand falls – the supply increases – prices fall. However, certain investors may be more advantaged during the next stock market pullback and keep holding their shares, and they’re left to watch the market devalue their portfolios. The aggregate change in sentiment introduces more systematic risk to their holdings.Real-estate is advantageous in that your property cannot be reduced to a value $0 under normal conditions. Since real-estate is tangible it always carries with it a utility. Even under the worst economic conditions an investment in property at least guarantees a roof over your head.Real-estate is more practical and easier to understand.The stock market is a vehicle by which investors speculate the performance of publicly traded companies, without being able to do anything themselves about it. They are left at the mercy of price-action – which for novice investors may be extremely frustrating. Frankly, it’s very difficult to explain why prices move in the way that they do, but the worst thing is that there is nothing that can be done about it.Real-estate investing gives almost every investor the opportunity to become an activist.Pricing of real-estate is based commonly on the tangible traits and surroundings. Some of the factors commonly used to value a property; location, floor plan, size, age, equipment, number of rooms, and condition. These are logical characteristics that one can physically tend to in order to estimate the value of their property and try and increase it. If a house doesn’t sell there’s a reason for it that is much easier to comprehend than with a stock.In commercial real-estate there are added metrics that begin to resemble the financial ratios employed by bankers and traders, but they still reflect the same logic as with physical traits.Rent ratio, for instance, is the quotient of monthly rent and the cost of the property.Cap rate is the net operating income (NOI) divided by the total cost of the property.Cash on Cash Return is equal to the pre-tax cash flow divided by the total cash invested.These are ratios that still make sense on a practical level. You, as an investor, can clearly gauge whether a property is a worthwhile investment without considering a myriad of technical indicators only to not be able to do anything to influence the assets performance as in stocks, but you are now able to take full control.Disadvantages:Unfortunately, investing in real-estate can be very troublesome.Real-estate investors face very obvious barriers of entry due to the high capital requirement to enter the market. To even consider real-estate investing and investor needs to allocate at least $100,000. One way to avoid the high capital requirement is to leverage yourself through a loan or a mortgage, which can in turn yield the investor a significant upside - while maximising risk.Big issue with real-estate investments is their liquidity. Entering and investment position would be an arduous process in real-estate that requires a lot more than just a push of a button. There is a high carry associated with managing real-estate that begins, and ultimately ends, with stacks of paperwork that must be prepared by an attorney. From the moment when you decide to purchase a property, to the time until you are able to generate returns could be weeks or months. Furthermore, exiting from a real-estate investment takes even longer, and you likely won’t close at the price you want.Illiquidity of the real-estate market makes the asset very unattractive to investors that may need to liquidity in the short-term, but may serve as an appealing asset class for long-term investors with the goal of financial preservation.The real-estate market is susceptible to bubbles and crashes just like any market, however it is their illiquidity that makes it sometimes appear as though they are less volatile.Here is a graph of the House Price Index for Oakland, San Francisco. You can see that although the index has risen almost 2000% since 1975 there have been cyclical dips, the most obvious of which occurred after during the 2007-2008 debt crisis.This chart is from Morpher – where you can trade even economic indicators such as the housing price indices of multiple regions.Stock MarketInvesting in the stock market has been a staple for most investors. Many people might be dissuaded from investing in the stock market due to an existing learning curve – although most people overestimate how complicated investing in the stock market really is.Check out my other answers related to the stock market; how to get started, and how to learn more.Investing in the stock market can be as complicated or as simple as you want it to be, and doesn’t have to be an overwhelming experience, and it certainly comes with it’s own advantages and disadvantages.Advantages:Investing in the stock market comes with a lot more flexibility.The capital requirement to start investing in the stock market is a lot less than in real-estate. You can start speculating on stocks with as little as $10. With barriers of entry in regard, stock market investments are a lot easier to diversify than real-estate.What is diversification and why should you diversify your portfolio?It’s a notion as simple as the time-old saying “don’t put your eggs all in one basket”. When any sort of investments are concerned, diversity is security. There is a reason why every successful entrepreneur has multiple forms of income facilitating their wealth in different forms of passive income.When you limit yourself to just one investment you expose yourself fully to the risk it carries. The stock market is a vehicle by which investors are able to support successful companies, and expose those that fair poorly. By buying and selling stock investors contribute to a price-discovery process that values a company. Well, sometimes that value becomes $ 0. If that’s your only investment then the value of your entire portfolio is also effectively worthless.However, the stock market grants investors a solution; choice.There are thousands of stocks listed on world wide exchanges that give investors access to vast array of varying business models, ideas, management styles, markets, sectors, and strategies. Every company has its own unique risk profile. For instance; a large company like Proctor & Gamble will generally be considered less risky than a newly listed cannabis manufacturer stock. However, when you assume more risk, you increase your potential for earning greater rewards. PG most likely won’t increase 100% in value over the next year, but a stock like $ACB (Aurora Cannabis) might. Does that mean that you have to choose one over the other? No, you can easily balance your portfolio to contain different stocks to diversify away the idiosyncratic risk associated with individual companies.Trying to do the same with real-estate would be difficult and it would require a lot of capital.Additionally, unlike with real-estate, stocks are liquid assets. It is possible to sell part of your holdings, or liquidate your entire portfolio. Try selling half the guest bathroom of your house next time you need some liquidity.Disadvantages:Investing in the stock market comes at a lot of risk. Although you can manage this risk through careful portfolio selection, optimisation, and risk management, you still are exposed to systematic risk or market risk. When the financial markets are in crisis, stocks sell off. The demand for more liquidity causes the price to drop, and even those who wish to hold their assets long-term will lose unrealised returns.Passive investment in the stock market is only one method of investing, and historically it has proven to be the most successful one. However, there is a myriad of disgruntled traders out there that have invested actively and lost their shirts. Many of them will say “the market is rigged”, and they are right to be sceptical of whether everything that occurs across exchanges is fair. There are many things that can influence your experience with the stock market; starting from your broker, to the execution, the market conditions, and your own perception the price-action before you. The stock market isn’t perfect; there are flash crashed – where prices shoot up or fall 10% at a time for just a few minutes, order flow manipulation – orchestrated by high frequency trading, and price slippage.At the end of the day, as a stockholder, you may enjoy certain privileges as voting rights or dividends, but you are still not ever able to manipulate the underlying asset as an investor. The frustration of only being able to watch is ever present, and the satisfaction of “calling it right” – occasionally – may not be enough.Summary:Real-estate investments require a lot of capital - and it’s going to be tied up for a long time before you can enjoy any profits.The stock market offers a wide diversity of assets at different levels of risk, but sifting through can be challenging.At the end of the day, don’t put your eggs all in one basket.Every asset has it’s advantages and disadvantages.If you’re interested in investing in both real-estate and the stock market, Morpher is the perfect trading platform for you. With no minimum capital requirements - invest in real-estate and stocks with as little at $5.Morpher is a commission free, infinite liquidity, trading platform that supports real-estate indices, exotic economic indicators, stocks, bonds, cryptocurrency, and commodities. It’s the perfect tool for the investor looking for ultimate diversification.Disclaimer: All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs. This post may contain bias, I work at Morpher.

1. REDUCING FRAUDReal estate fraud costs unwitting buyers millions of dollars each year.Criminals are able to fake title ownership, often simply by using editing software to stipulate transfer of property ownership in their favour, and at negligible expense. Indeed, title insurance itself is a $20 billion industry, and Lifthrasir estimates that at present it is costing around $1 billion to combat title fraud.“Forgery of documents showing someone is the owner of a property but really is not is one major problem. It’s been reinvented with technology as the duplicating of notary stamps and grant deeds is much easier with the use of the Internet.”Paul Barbagelata, owner of Barbagelata Real Estate in San Francisco told MarketWatch.One of the most common types of real estate fraud is rental scams.As reported by Morgan Brennan from Forbes, one of the most common types of real estate fraud is rental scams, in which a scam-artist will copy details and photos from a real listing, then re-post on another site while posing as the agent responsible for the property. The crook will then ask for money up front from interested parties — as a security deposit or a fee for their “services” — or request that funds be transferred to a third party (who is part of the scam) as proof of available funds to make the purchase. The unwitting buyer is unlikely to see a dime of this money again.Blockchain as proof of existence; proof of ownership; proof of transaction; proof of exchange; proof of value in any form of proof, is where this technology is showing its strength.Replacing paper proof with digital proof is the heart of blockchain technology and it’s where most blockchain start-up companies are focusing.Everledger is leading the pack, as it has addressed a very specific issue with a smart solution.Blockchain technology would allow you to upload your land title documentation to the network, which other users can record and verify if needed. This would provide proof that you are the first owner of the documents, and decentralised network verification would prevent forgery. When it’s time to transfer your title, the document simply requires ‘rehashing’ (encrypting) by you to prove he/she is in possession of the document.The elimination of costs associated with title insurance and fraud, according to Lifthrasir, is the biggest advantage of using blockchain.Companies such as Everledger are currently trying to solve this problem in the Diamond industry.Image source: EverledgerEverledger was created by Leanne to address this issue, and was one of the companies selected by Barclays for coaching through the Techstars program in the Barclays Accelerator. Everledger offers a permanent ledger for diamond certification and related transaction history on the blockchain, and acts as verification for insurance companies, owners and law enforcement.2. DISINTERMEDIATION (THAT MEANS CUTTING OUT THE MIDDLEMAN)Do you like these parties leeching off of you?1. Brokers2. Government property databases3. Title companies: Insurance and property databases4. Escrow companies5. Inspectors and appraisers6. NotaryThese middlemen exist because they hold information (The keys) that you can’t access or have skills/ licenses you don’t have that needed are needed to operate in the existing property transaction ecosystem.With a Public blockchain you can distribute a database where anyone can record information, without it being censored, and without needing permission. Equally, anyone can access that information. (Transparency)For example:Prior to the internet, the government and title companies were necessary to verify and record property data.How can Blockchain technology replace these middlemen?Blockchain will enable every property, everywhere, to have a corresponding digital address that contains occupancy, finance, legal, building performance, and physical attributes that conveys perpetually and maintains all historical transactions. Additionally, the data will be immediately available online and correlatable across all properties. The speed to transact will be shortened from days/weeks/months to minutes or seconds.– Jason Ray, Nov 2, 2015.CURRENT WAY OF DOING THINGSThe title to a property is a piece of paper. To transfer a property, you fill in the blanks on a deed, sign it with a pen, drive to a notary who puts their rubber stamp on it, and then drive this paper to your local government office to be placed in their database.Do you see the problem here?It’s SLOW and archaic. Too much time and money is wasted. Especially tax payers moneySOLUTIONBitcoin or Ethereum can create a digital title. This is a cryptographically secure token that can be transferred as effortlessly, quickly and cheaply as an email. Once people can easily verify property records themselves and transfer a title digitally, brokers, escrow companies, title insurance companies and notary publics will follow the decline of the post office.3.MONEY 2.0Bitcoin is a digital currency. Ethereum has its “Ether” token (Think of it as another currency) . Unlike the Dollar, blockchain currencies aren’t paper that are later represented by software, but are 100% computer code.The power of cryptocurrency is you can program it to escrow and distribute itself. With fiat (Non-crypto) money, you need humans and banks.THINK ABOUT THISWhen you want to rent an apartment, the landlord takes your security deposit in case you damage the property.By law, he’s supposed to keep the funds in a separate escrow account and not spend it. Once the lease ends, the tenant has to rely on the good faith of the landlord to return the deposit. But if you’ve ever attended small claims court you know how frequently this human/trust-based system fails.Me as a renter and owner have gone through both sides of the coinA) Never getting back the depositB) Tenant trashes the place and your deposit only cover 1/10 of damages.Either way, it’s a bad situation. No Bueno!Bitcoin has a function called multi-signature. In bitcoin, you use your private key to approve the sending of the digital currency to another person. With “multisig,” you can create a transaction with three private keys, where at least two are required for spending.Cryptocurrency can be used to create a programmable escrow. Instead of sending the landlord dollars to a bank account, the tenant and landlord create a multi-signature transaction. The tenant and landlord each has one private key, and a third one is given to neutral third party (Arbitrator). For the security deposit to be spent, two out of the three people will need to use their private key. The funds are locked in crypto-escrow for the duration of the lease.By using cryptocurrency, real estate escrows can be done more securely, quickly, and cheaply. Bitcoin is Money 2.0 also because it’s censorship-resistant.Bitcoin isn’t held in bank accounts but in a digital wallet stored on your computer or smartphone.Image Source: randomdirections4.SMART CONTRACTSUsing smart contracts based on blockchain technology, assets exchange could follow specific instructions.Property transactions could be added on a blockchain in a similar way to how payments between parties are handled using digital currencies like Bitcoin. Every ‘coin’ represents a unique house or piece of land and exchange is just like in any other transaction using digital currency.It is expected that a blockchain based business in real estate will not happen overnight. While the technology offers some exciting prospects for the future, streamlining such an innovative protocol with a very administration-based industry will take several years.Chris Groshong is the founder and president at CoinStructive, a San Diego-based Bitcoin and blockchain consultant focusing on merchant integration. He is in the process of building a platform for homeowner’s associations and community governance using smart contracts.“Smart contracts can add transparency of funds, voting and help automate CC&Rs, which can in turn alleviate time spent dealing with legal issues.”Smart contracts can also be used to aggregate inputs from various “oracles” and serve as a progress monitor for a real estate transaction. An oracle is a third party that is trusted by the participants in the blockchain. It can be something like a known API or another blockchain. An oracle could track the progress of the assembly of the various executed documents necessary to create a legally enforceable real estate transaction.”THE ADVANTAGES OF A USING SMART CONTACT OVER A TRADITIONAL CONTRACT ARETrustless – The open-source nature of the Smart contracts means that it will execute exactly as the source code dictates. This allows one entity to confidently transact value directly with another entity without relying on a third party to stand between them and ensure that each honours the transaction agreement.Autonomous – A Smart contract exists on a Blockchain where it will self-execute according to the pre-agreed contract conditions without any direct human involvement.Self-sufficient – Smart contracts are stored permanently on a Blockchain where they have all the resources permanently available to them in order to execute and remain in existence. Once published a smart contract becomes irrefutable, irreversible and unalterable. This means that all participates have very high confidence in execution surety of the process.5. EXPERIENCEBlockchain technology provides a better opportunity for more accurate tracking of customers and owners histories, across borders and banks, reducing the risk of defaulters. Blockchain technology can contain a huge amount of data, including entire contracts. The impact of “smart contracts” will have a profound impact. Smart contracts eliminate the middleman, such as a legal firm, as payment will happen based on certain milestones being met. By its very nature, the smart contract is easily enforceable electronically, creating a powerful escrow by taking it out of the control of a single party.CONCLUSIONThe transformation is not going to happen overnight. Blockchain technology is still very early (Think internet in the 90’s), and it will take the examples of forward-thinking real estate firms to lead the way and convince the masses that blockchain is the correct path to take.

The reality is that the general economy or that not related to the global equity markets has declined greatly. In fact if we look closer we find that many equities are actually 50% lower than their prices in February of 2020, and they have just come off 5 year lows. The Global Equity Indexes which show a recovery and are reaching new highs are largely doing so on the runups of a handful of technology and bailed out companies. For average people around the world 2020 was a devastating year, and it was a similar case with those who had real estate exposure in their portfolio but had the exact opposite effect for physical real estate. The facts are straight forward, if you were college educated, not a minority, and owned a house and had investments in large cap companies you did very well in the U.S. and other parts of the Western World. If a person was a minority, and was not college educated they faced not only greater exposure to the virus they saw their saving if any disappear. No amount of stimulus will get them out of debt, and as soon as the crisis is over they will be evicted as more than likely they are behind on mortgage or rent payments.In reality COVID-19 accelerated the processes underway in the U.S. and other Western Nations, and it showed many developing nations actually controlled the pandemic better and more equitably. In nations such as India, the number of cases did climb, but remained far lower than the U.S. which only has 1/5 of India’s population. The overall fatality rate has also been lower in India even when testing as a factor is analyzed. The reason may be diet, but also the fact that getting access to medical care in India not as hard as the U.S. as doctors are available in multiple settings including emergency visits which do not require going to an Emergency Room, and being exposed to more danger especially during a pandemic.In the U.S. pandemic management not only was not based on science initially, but followed a social path of inequity which seems to never change. There are those who will vehemently deny this, but statistics do not support their contentions, though opinion is a powerful force to reckon with and it can create belief no matter how baseless it is. What is for sure, is that U.S. did manage to maintain at least parity if not a clear lead in creating vaccines, and this really shows the paradox in the country. For at one level it is still a scientific powerhouse capable of helping humanity as a whole, but on a level of actually providing fairness in Health Care, Justice, Education and Opportunities there is simply obvious selection and disregard of any leaning to equality. The U.S. has socially and economically become a nation of two tales, and a land of growing inequality. The runup in the indexes and select companies mat well continue so long as interest rates remain low. Yet here as well, access to low interest capital is not found for for everyone. The markets are no longer running on free market principles but instead on selective economic policy. Perhaps, in the coming year and beyond these realities may become a cause to find a cure for, as the the cost of this dilemma is far more than just statistics, actual lives are ruined and lost.Footnotes:[1] The legacy of 2020: Riches for the wealthy and White, financial pain for others