Do You Have the Guts to Invest in this Market?

I recently had an interesting conversation with a multi-millionaire. I shared my findings about some of the incredible real estate bargains available now in our area and went on to make the point that 2011 was the year to buy real estate.

He asked me why I still loved real estate as an investment, even after real estate has led to losses for so many people.

I explained why I love real estate more today than I ever have. In fact, I believe it’s the best investment opportunity available right now compared to every other alternative, both in the literal sense of the word – as in investment property – and as an investment you would used as a primary residence. Think about the following:

1. Depending on where you are looking, you can often buy a foreclosure or short sale for $40 to $50 a square foot. This is probably less than half the price it would cost to build a similar home. What other investment can you get these days at half price?

2. All of the news stories about how bad the real estate market is these days has scared off other buyers and investors, virtually eliminating competition for the best deals and most desirable homes.

3. The demand for rental homes continues to increase each month, bringing rental rates along for the ride and making rental real estate profitable. Check out this article, which details a significant increase in rents noted during 2010.

4. Investors can obtain very attractive monthly income on rentals. After paying property taxes, maintenance and repairs, an investor in single-family homes in this market can have an annual return of 12% to 14%. Where else can you get a 12% to 14% annual return on investment?

5. The stock market seems to be overvalued again, and I’m worried it will soon fall.

6. Inflation will continue to eat away at the value of every dollar stashed in money market funds, CD’s and savings accounts.

After listing off these reasons and more, the multi-millionaire I was talking with went on to say that he was shocked I’d be so positive on real estate. He said he didn’t think many people would have the guts to invest into the real estate market right now.

Believe it or not, he told me that he has been in the process of shifting over 50 percent of his investments out of stocks and into real estate. His plan is to sell stocks at the top of the market and buy real estate at the bottom of the market. He said, “real estate has never seen a collapse like this, not since the Great Depression, and this is an opportunity of a lifetime.

I have to admit it’s hard as heck to buy when everyone else is selling. I guess he was right’ it does take guts to invest in real estate right now and from my observations of the wealthiest people in history I’ve noticed thing for sure…

They All Had Guts

Guts.

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