Real Estate Investing in 2011 | Why Real Estate Predictions Don’t Matter

Now is the time to invest in real estate.

Now remember, I’m not a speculator. I am not trying to predict the future nor do I invest on the “buy low, sell high” method. I buy for cash flow and get the appreciation as the icing on the cake.

Right now prices are so low due to the huge number of foreclosures, I can honestly say that even the weakest, most inexperienced investor can go out and make themselves rich. It is just hard to do a bad deal right now.

Forbes is even talking about real estate as a better investment than stocks. Look at their assessment of the stock market over the last ten years.

“A $100,000 stake invested in the S&P 500 ten years ago would have shriveled to $63,000, including reinvested dividends.”

Make a note that in 2000 the Dow was at 11,200. Today it sits around 10,000. People who have invested in the stock market have a lost decade on their hands. Many people are fed up and looking for better ways.

Here’s more from the article:

“Scott Patterson had his faith in the stock market severely shaken over the past year, so he decided to look around for something more solid in which to invest his retirement savings. The 43-year-old owner of a gutter-cleaning business settled last month on a three-bedroom house in Athens, Ga., which over the years has attracted a steady stream of renters from the nearby University of Georgia campus. Patterson put down 20% of the $127,000 sale price, or $25,400. After debt service, taxes, insurance and an allowance for repairs he’ll clear $3,500 this year. That’s a 12% return on the capital he invested (including closing costs). Depreciation deductions can shelter a good part of this from taxes.”

So the S&P 500 lost you 37% and your real estate made you 12%. That is a difference of close to 50%!

Do you now see why we are trying to get people to add real estate to their portfolio?

Another important thing to consider in this Forbes evaluation is that they don’t even account for appreciation, equity build-up or equity capture. The rate of return on most of the deals I am seeing today is over 100% when you consider all sides of the equation.

My final thought is that you must recognize that this example was done in the down market proving that real estate makes money in both the up and down markets.

It is important for every family in America to understand that they must have something like this in their portfolio. Something that let’s them win no matter what is going on in the market place.

Too many people are set up with the “heads they win, tails they lose” strategy. This is the buy low sell high mantra that only let’s you win in the up market. I want people thinking and investing “heads they win, tails they win.”

It may sound crazy, but that is how real estate works if you have an effective business model. If you don’t have an effective real estate business model, find someone who has one and copy it.

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