What would you do with a windfall? I've been asking people that question ever since the Mega Millions jackpot prize has reached over 250 million. The replies I received were much more varied than I expected.
First of all, let me add that a similar question was asked of me when trying to define what I wanted to do with my life and career, when I took a career planning class many years ago. While many of us do not normally play the lottery - when the chance for a big return is possible we often go ahead and "buy into" the game. Why not?
It's a small risk for a large return.
What does any of this have to do with real estate you may ask? Well, even when each person who replied to my informal "dream" question gave it some thought - everyone invariably responded that part of their money would be used to "invest" in real estate in some kind of shape or form.
Interestingly enough, no one ever mentioned the stock market. It might be because on some level, even with the recent pullback in prices we all believe that real estate is a durable, solid investment. It doesn't normally have to deal with a board of directors or stockholders. It's just you the owner. It isn't as susceptible to the real possibility that it's value will be completely worthless in one day because of the volatility of a fickle market and investor public, because when all is said and done - there's usually a building still standing that we can put some kind of value on.
In fact, there aren't many investments you can leverage so highly, insure and/or take advantage of tax-wise so much - as there is real estate. Maybe that's why it has made so many a millionaire in the last 10 years.
So, I have to ask another question now - why are so many people paralyzed when it comes to investing in real estate, or maybe a better question might be - when did real estate stop being a good long term investment? I have to admit besides the recent massive credit crunch, the answer is different for everyone. There's no argument that what drives our market is the ability of the "first time home buyer" to enter the market, because as recently stated in the media, it is the entry level home buyer that allows the rest of the market to move up.
This brings me to my last few questions... when did investing some of our own money, (what used to make sense when it came to buying real estate) change? Does the answer take us back to our earlier premise regarding the lottery - that we only want to invest in something when the risk is small and the reward is large? Isn't that what we normally do when we leverage our money in real estate? I'll leave you with this final nagging contemplation; if you don't take steps to stabilize your future, who else will?
Never forget, the rest of your life is up to you... So, last question, what would you do with a windfall?
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