Is Real Estate A Good Investment for You?

Owning a home is the American Dream, but is buying additional real estate a good investment? It can be so long as you have realistic expectations.

There are a lot of investment strategies out there, so why would real estate be on the table? The reason most people invest in real estate is the long term gain. Only in rare cases, such as flipping a home, will you make a killing in a year. In most cases, you make the big return over a longer period of time by paying down the mortgage and watching the home appreciate. Investing in rentals is popular because the renters tend to pay off your mortgage for you.

The primary comparable medium for real estate is the stock market. Many people will argue till their tongues drag that one or the other is better. In truth, they are not that different. Over the last 20 years or so, both the stock market and real estate market have returned in the 8 to 12 percent range. The primary difference between the two, of course, is liquidity. When you want to sell a stock, you can do so today. The buyer does not need to have the shares inspected to make sure they are in good shape!

When considering investing in real estate, it is important to keep a few guidelines in mind. First, this is a slow and steady profit strategy. The longer you hang in, the more you will make. Second, there are going to be good years and bad years. Valuations will go up and down, but you should come out ahead in the long run. Third, the cost of investing can eat into your profits. Keep in mind the costs of selling such as realtor commissions and transactional fees.

With any investment, it is important to consider the potential risk that everything goes to hell in a hand basket. Obviously, this can be a big problem with stocks. A high flying stock today can be a loser in a big way tomorrow. Just ask the folks that owned Enron, Adelphia and so on. The real estate market, on the other hand, tends to be less volatile. Valuations will change from time to time, but drastic moves are rare.

The decision to invest in real estate is one that only you can make. As with most assumptions, real estate may or may not be a good investment strategy for your situation. Make sure to look into the details so you know what you are getting into.

Learn more about a tremendous real estate investment opportunity at UFCAmerica.com.