Friday, October 19, 2007

Know when to hold 'em?


Here is a great article from Real Estate Insights on REALTOR.org about pain that some investors are "feeling". I'm not sure exactly why (other than my age:) but it made me think of the Kenny Rodgers song "Know When To Hold 'Em". The article make a great analogy about investing in the real estate market versus the stock market. This is a must read for anyone who is currently renting! Lawrence Yun, Vice president of NAR Research, has some excellent statistics to counter the argument that people who own and invest in real estate are feeling "pain" now because of the current market.

Mr Yun reports that someone who invested $10,000 as a down payment on a typically priced house in the US that appreciated at 5% per year would have a return of $110,000 after 10 years. Compare that with a $10,000 investment in the stock market at 10% that would yield a return of only $23,600. This could also explain the next statistic. "A typical homeowner had $184,400 in net worth versus only $4,000 for a typical renter." Wow, what a huge difference!

NAR reports that "only the recent buyers (flippers) who bought last year in few specific markets would have encountered a loss" which of course is what the main stream media is reporting on. If you want to buy houses and "flip" them for a quick profit, be careful. It can still be done in today's market but you must do your homework and know what you are getting into.
Investing in foreclosures is also a tricky business and needs to be approached with caution. If you have the nerves for this kind of investing, give me a call. I can offer you some tips that I have picked up along the way.

But if you want to invest for a great return over time, now is the time to enter the world of home ownership. Interest rates are low and inventory is plentiful. Don't let the sensationalism of the media scare you away from increasing your net worth today.

Call me today and I will help you meet your goals.

Michael Bradford
770-862-8002

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