Sunday, August 23, 2009

Why Invest in Real Estate?

This is a good question, especially in the current climate with many people losing their shirts as well as their homes in this most recent recession. But when you look at those who have lost their homes you find that many of these people have bought way above what they could truly afford, bought poorly, been advised badly, have not taken appropriate steps like mortgage insurance to insulate themselves or a combination of all of these.
Their situation has been further hampered by the banks and other lending institutions. Once upon a time these organisations would screen every application thoroughly and if there was any problem you got turned down. With the pursuit of the big profits for the big bonuses, these safety checks became very relaxed, and hence this became a major cause for the crash we have had.
So after going through all of this why would I say that investing in real estate is still a good thing. Easy really, just look at the history of property. After every fall comes a rise, and with every fall and rise comes opportunities. And unlike the share market, property is real, not something on paper. When a share market business crashes your bits of paper are worthless. When the property market crashes you still have a house which you can rent out or sell if you are really desperate.
Give me the property market anytime for its long-term prospects and safety. Happy investing.