Thursday, November 11, 2010

Is Real Estate Still A Good Investment?

Real Estate an Investment?

A gentleman recently asked me if real estate was still a good investment, and the answer surprised him. I believe he expected the usual bad market, bad times story. I think he was surprised to hear of my optimism, while much of what I said wasn't a glowing picture of the local real estate market it created a picture of reality. This is what I said...Take for example a couple has money set aside for retirement; they might have some of their investment in stocks, bonds, mutual funds, gold, certificates of deposit (cds) or setting in the bank. Many have taken the largest portion out of the stock market for fear of wild swings with little control or notice, so they are left with safe low return investments that hardly keep up with inflation. So, what about real estate... it has a few promising characteristics unique to this point in time.

1) There are great values in the market place “right now”
2) People must live somewhere, and homes are far more popular than apartments – making single-family residential homes “prime real estate”
3) Monthly Rentals create a Predictable Income stream
4) Predictable Expenses (ie taxes, insurance, routine maintenance, etc)
5) Reasonably Liquid, if the need arises to sell.
6) Easy to locate your investment, unlike trying to find your money when the Stock market drops 500 points.
7) Peace of Mind when using Property Management Services – someone else takes care of the day-to-day hassles for a nominal fee.


Example 1: Suppose you have $100,000. setting in CD at a local bank, that investment while quite safe will earn about $600.00.

$100,000.00 = $600.00 (.06%)

Example 2: Suppose that same $100,000. purchased an under valued bank owned foreclosure that needs some minor work for $85,000. Then hire one of our licensed general contractors to make needed improvements to make an ideal rental property, spending $10,000. After closing costs, insurance, taxes, landscaping etc – you have spent $100,000. Next, place the property under our management program whereas we screen the tenant prospects, complete the paperwork, show the property, routinely check the property, collect rent, handle the complaints, and then mail you a check and statement monthly. That same investment would like something like this:

$100,000.00 = $7,500.00 (7.5% -- 12x the bank rate)

Needless to say, the numbers tell the story – finding a 7.5% Rate of Return in this market is much easier than you think. Many people have diversified their portfolios with Single Family Residential Rentals.

Utilizing our real estate services, general contracting service and property management services this not only possible – this is REAL Estate! Let us work for you – to make your investments make sense.