So the state of the economy sucks and the stock market is continuing in a downward spiral. Lately, I feel like a big pessimists. I need to keep my eyes off the news and focus on the positives. What positives are there. Well I was thinking about how great real estate is as an investment. There are many investment options to pick from including stocks, bonds, mutual funds, commodities, money market accounts, certificates of deposit, and real estate. No, matter which way a person goes they face market risks with whatever vehicle they are using for the investment.
Investment real estate is a great hedge against whatever the economy is doing. Say for example you want to be a slum lord and own an apartment complex or maybe just a duplex. The rents that you receive from your rental will more than likely remain very consistent and probably trend up as time goes on even if the value of the property declines. The best thing about it is that you have someone else (the renters) paying for your investment and hopefully if you have done everything right on the purchase you will be receiving cashflow on a monthly basis. Over the long term the renters will pay off your mortgage and you will receive 100% of the money.
Another reason that I feel that real estate is a better place for your money than the stock market is because it is more stable. Take an example of a 60 year old person who invested in the stock market for their entire working life hoping to live off that money when they retired. In today's market that 60 year may need to work for many more years because they possibly would have lost a significant portion of their investment. If that same 60 year old would have invested their money in the real estate market they would more than likely have completely paid off the mortgage on their investment property and would be able to live off the cashflow it provided even if the value had declined more recently. Rents are typically slower to change than prices in the market place.
What's your opinion on the market lately?