Why Real Estate is still a great investment in an economic downturn.

“Let history be our guide” as the old adage says, and that’s exactly what we need to do when it comes to our current economic situation and more specifically our current real estate market.

Real estate has long been a strong investment. Throughout history we can see those that invested in buying up real estate have set themselves up in an advantageous position for their future. How can you try to do the same?

As many Americans are taking their money out of the stock market, because of the failure of the financial market many more are taking advantage of investing their money in real estate.

I have spoken with many individuals that are so scared about the economy, that they cannot see the forest through the trees. When I tell them that they should invest in real estate they seem a bit confused, the reason being with home prices falling, they think that it is a failing market. The funny thing about real estate is that it is a finite commodity. We cannot make more land, and everyone needs a place to live, so individuals will either buy a home or rent a home.  And even if property prices fall dramatically, as the old adage goes, “time heals all wounds when it comes to real estate.”

Learning from History

Take for example John D. Rockefeller Jr. During the Great Depression developed land and was the sole financier of a vast 14-building real estate complex in the geographical center of Manhattan, Rockefeller Center, and as a result became one of the largest real estate holders in New York City. *

I know here in Grand Junction, CO that some of the wealthiest people are ones that bought up a lot of real estate in the Grand Junction area in the 1980’s when the oil shale industry closed up shop and moved out of town. The local economy as well as the national economy was in a downward spiral at that time, similar to today. As the market started to recover they started to develop the land or sold it off and are now financially set.

What a Deal

Let’s take a look at a great deal. In Tolleson, Arizona, just outside of Phoenix, there is a 4 bed, 2 bath, single family home listed for $110,000. What a steal. Even better are the 4-plexes for sale near the colleges and universities in Phoenix that are listed around the same price as this home, and are fully occupied with renters. Naturally this equates to immediate cash flow.

Obviously invest in areas that are desirable for people to live in. Waterfront property is always sought after, as well as warmer and more temperate climates.

Make sure you have investment goals for the real estate you buy. Is this setting you up for retirement, helping you build up your portfolio by attaining more assets. Then when you are looking at purchasing property you can have a gauge to go by.


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