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Real Estate as a Stable and Reliable Investment

By: , dated January 25th, 2013

Okay, okay, we know what you’re saying. “What chance do I have to make money in real estate with experts like Donald Trump chomping up every bit of available land between their dinosaur-sized jaws and devouring all the juicy profits that lie within..?” If you’ve said this to yourself – or at least something vaguely similar – you’re hardly alone, and yet the real estate market isn’t an abstract concept only available to a special anointed group of angelic investors who happen to have been in the right place at the right time. More than likely, you are in the right place at the right time to invest in some piece of real estate somewhere, and all you need to do is get pointed in the right direction in order to find it. People call it “having a nose for business,” but in reality it is just doing a bit of simple legwork, talking to the right people, and taking a few risks. Virtually any way of making money in the modern world works just about the same way, and yet real estate investment has the aura of being an incredibly reliable way of making money.

Unlike sending all your savings into a hot stock tip you heard about through your ex-wife’s cousin’s stock broker at a cocktail party, real estate has more stability in the returns it generates on investments that make it a different sort of animal in the investing game. Sure, buying a piece of undeveloped land in the hinterland of the territory you live in probably isn’t going to be as profitable as throwing all your life savings into Microsoft would have been 20 years ago, but hey, its extremely difficult to pick which companies are going to sail into nirvana from the ones that are going to rocket its shareholders in Enron-like despair. And, if you’re like most of us, you don’t need the headache of worrying about share prices, buying high, selling low, bulls, bears, and all that other jargon that goes along with investing in the stock market. However, it isn’t as if you can’t lose money by investing in real estate – you certainly can - but by and large investing in the land of the United States is a pretty reliable way to ensure that someone, somewhere, is going to want to live there or develop something at some point. With real estate you have the benefit of capitalizing on an endlessly restless country that is always shape-shifting and reconfiguring itself in new places and reinventing its existence in new ways. The main thing to remember: if you don’t capitalize on it, someone else always will.

It is in looking for the right place to buy that you encounter the most difficult aspect about real estate investing. It often takes a keen eye to observe where and when a certain area of land has tapped out its potential and then making sure you avoid it like the plague. For instance, if a town near you has experienced rising housing costs for a long while and has developed an infrastructure to support a new influx of homeowners into the region who have steady jobs and yet which can’t expand much further, it probably isn’t your best bet to sink the family savings into owning property there. The simple fact is that at some point the cost of living in a certain area reaches a point of stagnation, where it cannot go much higher despite how much the local economy is thriving. If you’re thinking of investing in a mill town where half the residents work at the local factory, you’d better think about how long it will be before that single-factory economy runs its course – the last thing you want to be left with is the deed to a piece of dead earth in a ghost town.

One of the most common ways that individuals make money investing in real estate is to purchase a home which they can then rent out to other families or single tenants, and then utilize the monthly rent paid by the tenants to subsidize the mortgage payments. This is a very popular way to assure that you have direct ties to the piece of property you own, and are assured of its continuing spot in the marketplace. The important thing to know here is that though you’ll be able to pay off the mortgage via the renters - always be sure that there is demand for tenants at the place you are buying, obviously - you’ll have to come up with the down payment on the house. A down payment on a home is usually calculated at 20% of the market value, so you’re looking at a pretty large chunk of money up front. If you have the money saved up then so much the better, but if you need a hand getting together the cash you can apply for a loan from a bank, which, under usual circumstances, is probably a very acceptable risk for them to take and so it will not tend to be too much of a problem.

Developing a financial strategy that will assure you that your investment in real estate property is a good one is essential and you may want to consult with a financial advisor to see if such an investment is the right thing for you. A good advisor will be able to give you tips not only on where to invest, but whether or not such an investment will be a benefit to your financial goals, or just an unnecessary drain or unsubstantiated risk. Once you’ve gotten the hang of it, you may find that real estate investments suit your lifestyle and can afford you things you didn’t think were possible to attain – you may realize that a secret club of anointed individuals may not rule the land as you once thought.

This article was brought to you by the InvestorGuide Staff Writers and Editors.

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One Response to “Real Estate as a Stable and Reliable Investment”

  1. Lari Kent says:

    good artical

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