27
Jun
11

Owning Shipping Containers vs. Real Estate

The slide of the real estate market in that started in 2008 was perpetuated by greedy executives and financial gurus in the highest echelons of society. In America, the dream, the so-called “American Dream” that has proved to be more and more elusive to so many middle and lower class citizens was sold to these individuals on a silver platter in the form of home ownership. People that couldn’t be approved before were packaged together with other risky borrowers, insured and then sold off in new “break through” financial instruments that eventually went bad. We all know the rest.

American Dream

Historic Returns of the Real Estate Market

From 2001 to 2006 real estate appreciated 12.4% but we’ve already dispelled with the reasons for this so let’s return our feet to the ground and talk about what life is like on Earth, where the rest of us are looking to make prudent financial and investment decisions. From 1978 to 2004 residential returns were still good but far lower than the inflated number brought about by the bubble in the US housing bubble, coming in at 8.6%. The highest sector of the real estate market during this time, was in the commercial sector, registering gains of 9.5%.

CNN Money published a good post a few years back that compared the advantages of stock ownership versus real estate. They compare performance, leverage, costs, taxes, transparency, effort, volatility, and diversification. In the end real estate’s biggest benefit is leverage. And while we’re not trying to beat a dead horse, it’s clearly evident when this is misused real estate can sink you faster than any other investment.

Stocks come out as the winner vs. real estate.  Take a look at our post on container ownership vs. the stock market to see more on why you’re better off owning containers than stocks.

Container Ownership vs. Real Estate

From April 2007 to October 2008 residential real estate prices declined 8.8%. During that same period that the housing market was getting hit, owners of shipping containers managed by Pacific Tycoon earned of 25% in the aggressive portfolio, and 12% in the guaranteed portfolio.

Since inception, the Aggressive portfolio has averaged 29.97%, which is far above the 12.4% that housing prices averaged during even the biggest of real estate bubbles. Safe and sound with hard liquid assets or risky and speculative playing the “when will the bubble burst”. The smart money says you’re better off going with a proven model that distributes in demand consumer products to the busiest ports in the world calling for them.

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Gain unearned income. Own shipping containers and lease them to us. We contract with companies who need to ship materials.

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