Why do you / would you invest in real estate? Theres other options but i want to hear your opinions.

The US real estate market is a much more risky area of investment these days - there are profits to be made in some areas, but as a general trend it seems that people have been blindly pushing money into real estate simply because it was there, and now there are mini-bubbles bursting across the US.

I agree with Brian. It is a dangerous play in the United States. Real Estate prices are currently very volatile. On the other hand, however, you can't lose your entire investment in real estate. you always hold a physical property, rather than an abstract "share" of a company.

Real Estate is the only thing they can't make more of. It's almost guranteed to appreciate over the long run.

Real Estate will always be around and as daytrader said more of it can't be made...unless you build your own islands like in Dubai but the price will rise due to demand and supply...simple

As long as you do the proper research and educate yourself on how to buy real estate, real estate is the one investment that is really tangible and in the long run safer than other investments. It's all about education no matter what you invest in. But everything has a cycle and real estate is going through its right now. You don't buy at the high just like any other investment. You must evaluate risk and forego the greed and emotion. This is the number one problem we had and why there were bubbles in different parts of the nation. IT's all regional too not nationally. Not every real estate market is going down, despite what you read. The longer you've been an investor, the more you understand the value of real estate.

What created the bubble were the flippers, just like day trading in the late 1990's until that market fell. We will always have those flippers as well as we still have the day traders but not every person and their mother will be one now because they were stupid and got hurt due to their greed. It's all about education. These manic situations happen in stages, it's the late guys who came to the party who I mean that got hurt. The other ones already made their money and are waiting for things to settle before they buy again. Like I said, it's no different than any other investment when it comes to human nature.

hi there hello

Historically Real Estate has been good but we will always have peaks and valleys. When I buy a property I look to hold it for more than two years and do a lease or lease/option and now I become a landlord which some people hate doing this. If you can connect all the dots to this point then you can realize a profit from Real Estate considering taxation, appreciation and cash flow.

It was said above that you can never lose all your investment which is not true. Most properties are not paid for with cash, they generally carry a mortgage. You are investing in a leveraged position which allows for greater profit, but can also attract greater loss if the market goes soft, or you overpaid when you purchased. Allways buy on the assumption that you will not be able to sell immediatly. The property must be able to generate positive cash flow or you could be looking at a long bleeding loss. Sometimes unexpected repairs are needed, or planned upgrades go over budget and wipe out both profits and reserve cash you may have. Get to know the market conditions in your area before investing. Look for deals where the seller is motivated to sell (Avoiding BK, Forclosure, Job Transfer, etc.) Making a profit is more likely on the purchase, than on the sale. Also, be very aware of what improvements will add value, vs. those which only improve looks.

When investing in real estate unless it's your Home I've found it always best to buy something that actually pays for itself such as rental property.

It's relative to your goals. For instance I bought 2 extra homes within a 3 yr period. One home which is 4 miles away from my residence I rented and the other is a vacation home in the Ga mountains that didn't receive appreciation before I bought it as we did in Florida. Last year I capitlized on selling the home I lived in since 1999, then moved into the rental which I bought in 2004 for a steal before the big boom. So I'm living it it now after rehabing it. I will stay here 3 yrs (no capital gains and scaling down) and move to the mountain home which now has appreciated 20% even in this depress market because baby boomers are looking elsewhere besides Florida for their retirement homes. So I paid off the home we live in now and will pay off the mountain home when we sell the home I live in now because the plan is to retire in the Ga home. No matter what the market does, I will have a good profit on the home I live in now because I bought this home for a steal and has still held its value for the past year. (real estate values are regional and not all areas have suffererd as much as the media has said)As long as you can manage the payments, buying and holding can benefit too. You have to know value. Also, I got a nice fixed rate of 5 1/4% for the vacation home in GA. I won't pay it off as long as rates go higher due to the low interest rate I have.

Real estate is not for the timid.

I work with a ton of real estate developers and small investors, including some where we set it up for them to use their 401k and IRA money to invest with. They are very confident in their abilities and all have made profits, but even they will warn against it for most.

First off, you CAN lose money in real estate, just like any other investment. Even though you have a physical property, I've seen people lose tens of thousands of dollars on their investments. For example, a friend of mine purchased a new condo in an upscale neighborhood full of corporate executivies. His plan was to rent it out to these executives, and maybe make a deal with the local corporations for them to rent it out. It was a good plan. But it backfired when he didn't get the rent amount he needed to break even on the loan, considering property taxes, homeowner's dues, and other fees. He still isn't, and he's losing money even though the loan is being paid down. This is money every month that is coming out of his current investments. Even his long-term return is at risk, given historical appreciation rates in that area.

Second, most people underestimate housing cycles and the right time to buy/sell, so you have to be committed to holding a property for a longer time period than you expect. This could create some considerable financial risks.

Third, secured debts provide no safe haven in bankruptcy, so if you lose your job, or a renter, and blow through your life savings, you have fewer options than if you simply bought a REIT mutual fund or something.

Lastly, real estate is naturally going to appreciate with inflation, but people vastly underestimate their "true costs". For example, if you pay $2500 per year in property taxes, that is a cost item. And there is also a lost-opportunity cost of that $2500, because it's money you could've invested and earned a rate of return on, for many years. But all too often investors look at what they paid for a property and then what they sold it for and calculate their rate of return. They simply do not consider ALL costs involved, which makes real estate an even more risky investment than people believe.

On the flipside, I believe that people can be very successful with long-term real estate investing, and recommend it as part of your portfolio. The key there is long-term, not buy-sell flips. But for the timid, mutual funds can provide that part of their portfolio at a lower cost and reduced risk.

Every real estate investor my CPA knows that flips properties has lost money over the long-run, just like the majority of daytraders lose money over the long haul. The most successful ones I know are those who see things 20 years ahead and buy property then, letting it appreciate it, and then selling it to developers.

In any investments, there are potential for gain or loss. Even in certain areas, a certain area might be getting good rental or capital appreciation, but a neighbourhood a few miles away, might experience slow or no growth at all.

You really need to know in depth what you are getting into.

ed

i think in real estate money grow very fast instead of shares and mutual funds.there are great up and downs in real estate but these are profitable for the investor

I wouldn't invest in real estate in the next year or two. For me the current levels of real estate prices in Canada and USA are still very inflated and they should come down by 30-40% to make me interested in this market.