For some, the question they might have asked themselves is "Why would I invest more money into my home, when it has dropped in value?"
That‟s a fair enough question, and the answer goes beyond the simple fact that home improvement is affordable right now.
A recent article in USA Today reported that the Vanguard group, one of the nation‟s largest providers of retirement plans, determined that about 60 percent of 401k plan contributors have more money in their plans than they did in September 2007, when the markets crashed.
The primary reason, Vanguard said, was that people continued contributing to their accounts even after the collapse cost them a great deal of money at first.
As they continued to contribute while the market rebounded from its disastrous lows of last March, their accounts grew. Had they stopped investing, they would have lost twice: once when the securities market bombed and their account values plummeted, and again by missing out on the rebound.
What does this have to do with real estate? Well, Vanguard‟s evidence confirms a basic rule of investing. Buy low and sell high.
If you were a real estate investor prior to the market tanking, you probably hold properties that fell in value compared to what you purchased them for. If you stopped investing, you‟d be simply dealing with that fact.
However, if you continued buying properties, at the discounted prices, you‟d be capitalizing on the market rebound, similar to what 401k investors have experienced in the securities market.
But you need not be a "real estate investor" in the truest sense of the word. If you own a home, you are invested in real estate. Isn‟t a home often the most important investment you make?
If you believe it is, does it make sense to stop investing in it? Does it make sense to put off needed repairs? Does it make sense to postpone on improvements you had planned on making?
If you view your home as a long term investment the way people view their 401ks then it doesn‟t. Just as people who contributed to their 401k plans in 2009 benefited from buy-ing discounted stocks and funds, if you can make repairs or improvements to your house while prices are low, you will benefit even more when the market has fully recovered.
John Rockefeller‟s advice was "Buy when there‟s blood in the streets," and many real estate investors are doing just that, snapping up foreclosure deals at deep discounts. They are banking on the solid principle of investing that Vanguard‟s recent findings support.
The thing is, you can invest in your own home, too. If you can add value to it with improvements now, that value will likely provide additional returns in an improving market.
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