Should You Invest In Real Estate Now?

6 Reasons Why You Should Invest in Real Estate Now

      The media has been buzzing over the past few months with stories about the fledgling economy. Given its current state of slow growth, many investors and businessmen are asking the same question: Where Should I invest and Why? Look no further, keeping faithful to our mission of providing you with the best investment resources, we’ve assembled a list of 6 Compelling Reasons why you should take advantage of the current real estate market and invest now before it’s too late.

1.    Capital Appreciation—As most news sources may have told you, real estate values have dropped significantly since 2008. In fact, indicators show that because of the recession, most markets have bottomed out.  What does this mean for you? Within the next few investors, investors can expect to see returns and appreciation on their property investment.  Real estate is different from other investments because you don't have to purchase it outright—you can finance just a portion of the cost to acquire it.  The capital appreciation of a property is not based on the home-owner’s equity. This means that regardless of whether a property is owned free and clear or there is a loan covering 60% or more of the value, the property will appreciate exactly the same.   Take advantage of this now: buy low and you’ll be able to sell high.

2.    Easier Cash Flow –One of the strongest reasons for investing in real estate is its easy access to cash flow. Like the stock market, real estate investment comes with a risk--the value of your asset can go up or down.   However, in the stock market, when the value of your stock portfolio drops, you need to invest to gain back the value lost or hope that the stock recovers its previous value. If you are retired, a loss of stock portfolio could mean having to figure out how to live on less.   Although real estate values go up and down, with investment property you still have the cash flow because your renters are still paying the rent regardless of the current value of the property.    With real estate investments, money is flowing into your accounts every month.  With enough of these types of investments, you can live comfortably on the cash flow that comes from real estate.

3.    Diversifies Your Financial Portfolio – Like the old saying, “Don’t put all your eggs in one basket,” every good investor knows that it’s important to diversify your portfolio. Real Estate investments made in the form of a 401K or Self-Directed IRA, for example, can be made in different markets across the US.  Because the real estate market only sometimes follows the stock market, real estate investments can be a good asset to fall back on if you are in financial trouble or if your other investments are providing negative returns.

4.    Affordable Pricing – Congruent to reasons #1 and #3 , investing in real estate today is far more affordable than it was in previous years. Because real estate values have dropped significantly since 2008, it is now a much more affordable and feasible investment option than ever before.

5.    Use Leveraging to Afford Costs – One of the great benefits of real estate is its ability to easily finance itself, especially in the form of leveraging. Like most other assets, if you want to purchase a $100,000 stock investment today, you will be required to produce $100,000 to purchase it.  With real estate, however, the cost of the investment can be leveraged with a real estate loan.   For example, if you have $200,000 to invest, you could buy one rental property for $200,000.  If the investment doubles in value, you will have made $200,000 (which covers the price you paid to purchase the place).  If, however, you purchase two investment properties with $100,000 down each and the properties double in value, you now have $400,000 worth in assets (an additional $200,000).   If you’re renting these places, this can help greatly with your cash flow because you will now have 2 rents being collected each month instead of one.

6.      Invest with Partners – Unlike the stock market, if you do not have the funds to purchase an asset or property today, you can team up with friends or partners.  You could pool Self Directed IRA or Self Directed 401(K) funds to make your purchase.   This is very different from the stock market where you purchase everything on your own. The ability to team  up means that even investors who don’t have hundreds of thousands of dollars can purchase and own real estate AND profit from it. Indeed, the time to take advantage of these opportunities is now before the market picks up again and before the pricing of properties climbs.

--Raj Persaud, Business Development Manager, Manhattist Inc. 

[thanks to Charity Shehtanian 

Cal Coast Financial Corp]