Real Estate is an important part of anyone’s investment portfolio.
Whether it is the house you reside in, a rental property, vacant land, or a commercial building, a good piece of real estate will almost always increase in value over time.
That said, a number of factors can happen which can affect how much your property increases in value.
Any time you buy a property that is less than desirable, you can lose money. Structural issues you may not be aware of, property in a declining neighborhood, land in a flood zone, natural disasters such as fire, flood, hurricane, earthquake, zoning issues, tax issues, insurance issues, all play a part in the value and profitability of the property.
Economic issues can also have a great effect and are much harder to predict and knowingly avoid.
In 2008 times are tough. People are losing homes and jobs, property values are dropping, companies are going out of business or are seeing major declines in revenue, and a property may not sell as quickly as you’d like.
Even a solid commercial property can have a tenant break a lease and leave the owners temporarily in a negative cash flow position.
Just as I’ve seen my home triple in value in about 5 years, I’ve also seen it decrease by about 20% in 2 years.
This could have gone the other way if I purchased at a different time. It could have gone down significantly in the first couple of years and then rebounded in the next 5.
Real Estate is still a good investment. It is still up to every purchaser to do their due diligence and know what they are buying. It is not a liquid asset, and is almost always more profitably over a 7-10 year period of time.
Those who buy properties to resell at a profit in a short period of time will make a lot of money in some cycles and lose a lot of money in others. It’s the nature of the business.
The moral of the story is, just because real estate can go down as well as up don’t count it out as a good long term investment.
I had a client that did great with a few properties in Florida during the boom there. He sold and immediately bought several more thinking he’d make another huge profit and keep repeating the cycle. Now he is pouring money into empty rentals which aren’t selling and quickly losing his original profits.
Unfortunately, all his eggs are in one basket and he is forced to learn a difficult lesson.
Paula Straub
http://www.savegainstax.com/
savegainstax@gmail.com
760-917-0858
Fill out a Qualification Questionnaire and see if you qualify to save capital gains tax. Go to
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Find the “Definitive Beginner’s Guide to Potentially Saving Hundreds of Thousands of Dollars in Capital Gains Tax” at
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