Real estate investing is about financial earnings and reliability. It is also about investing in something that you and most people actually understand. Compared to all other investment strategies, real estate is the most stable investment second only to government-backed bonds and FDIC bank accounts. Neither of which yield enough income to keep up with inflation to say nothing about growing wealth.
Stock markets are the natural alternative investment to compare with real estate. We all know how volatile stock values are as they bounce up and down to the hourly news headlines. These aren’t business headlines. These are global and national headlines about a natural disaster occurring on the other side of the world that has nothing to do with real estate values in your backyard.
But maybe you think you can gain an insight to big business by reading annual reports in deep detail. These are the SEC required reports containing more footnotes, contingencies, and onetime events than they contain real facts and figures. Compare that to a simple financial ledger for a small apartment building, duplex, or single family house that you can touch, smell, and walk through to see the condition for yourself.
Of course, you could begin your own small business so that you have full control of operations. If your business is a retail store or warehouse, you’ll need to be on the job every day for the next 20 years without taking a vacation. But then again, owning real estate is owning your own business. However, small real estate businesses don’t require your full attention day in and day out. Many investors (especially beginners) get started very part time. And yet, real estate is secured by a physical asset that is an overwhelmingly stable investment. Much more secure than inventory for a retail website.
Today, the real estate market is at the high end of the cycle. Rents are high, property values are appreciating at a historic pace, and sales prices hit new highs every month. People that invested at the bottom of the cycle in 2010 and 2011 are making a killing today….