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Hey everybody! I hope you had a good week and are making the most of your weekend.

In this week’s newsletter, I wanted to explain how real estate investments can help you take the emotion out of investing since real estate is more illiquid compared to stocks.

Some people may see an investment that is illiquid as a bad thing as it is more difficult to access the cash with it being tied up in a deal for a specific hold period. However, I think there are benefits to it.

When it comes to stock markets and the prices falling, people tend to have a knee-jerk reaction and want to cash out right away. This can be as simple as selling stocks on your computer with the “click of a button” or with a quick phone call to your financial adviser.

However, we all know selling when the price is falling is not ideal when it comes to trying to make a return.

With real estate, it is a longer process to cash out of the investment due to it being a physical asset.

This should encourage you to keep your money invested through the tough times and allow you to come out on the other end in a better position than when you started.

For example, with smaller properties owned outright, you will have to go through the home selling process, which can take several weeks or months. This includes listing the property with the agent, people viewing the home and the due diligence process before closing.

For passive investments in single-asset syndications, it may be even more difficult to buy out of your interest before the business plan is finished. This all depends on the specific deal and the general partner.

So keeping money in the deal through tougher times can be better than cashing out as it involves more long-term thinking.

If you keep your money invested in a real estate deal through the downturns, then you are able to reap the rewards when it is higher again.

This is all easier said than done since we are all humans that are emotionally driven. And saying one thing is different than actually doing that.

However, these are my thoughts on the benefits of real estate being more illiquid than other investment opportunities.

If you have thoughts where you agree or disagree, let me know!