Every time I make payments towards my retirement account I think about the stories of Bernie Madoff, MF Global and other investment schemes, where the investment money was “lost”. To date MF Global is missing roughly $1.6 billion, JP Morgan had trading losses of $2 billion and I’m sure there will be other horror stories. Once a month I receive my retirement statement that some months show increases and some months losses of my funds. This is only a printed document from a national financial company. I trust that these statements are correct and the money will be there when I retire.
However, to be on the safe side, with my son Andrew we purchased a duplex, for investment, to rent out and receive the benefits of appreciation, cash flow, tax depreciation deductions, with returns greater than the ½% interest we are receiving from our bank. But the most important part of this real estate investment is the knowledge it is there. We can physically touch our investment.
In the United States, ownership of real estate is protected in the sense that it is very difficult for it to be stolen, it cannot be taken by the government without compensation, with its financing provides leveraged returns and its ownership is recorded in the public records. This combination makes real estate purchased at the right price a very good long term investment.
The question is how to make an investment at the right time and the right price. Many investors say the most important factor is location, location and location. While location is important, timing and price are also very important. The best timing is when the market is near the bottom and will rise over time. The right purchase price is when the rental income less expenses will give a positive return. I believe we are near the bottom of this real estate cycle and now is the time to consider the purchase of investment real estate.
The negatives of owning real estate are the issues of property management, paying bills, collecting rent, overseeing maintenance and here in South Florida worrying about hurricanes. The positive is the security of knowing the investment is really there and it is yours.
Let us help you make sure “YOUR MONEY IS REALLY THERE”