Is real estate a good investment?

Is real estate a good investment?

Real estate is often compared to stocks and bonds to determine which is the better investment. Unfortunately, people who were buying real estate a decade ago thought that their real estate WAS a stock or bond, and they tried to time it right when they were buying and a couple of years later when they were selling.

REAL ESTATE IS NOT STOCK!

But it is an investment, an investment in your life and that of your family.

If your intent is to buy a home to live in, raise a family in, retire in, and perhaps even die in, real estate is a great investment, regardless of when you buy.

If you bought a $100,000 condominium in San Diego County in January 2000, you would have a condo valued at $154,000 today. That’s even after the enormous valuation increases in the early 2000s and the enormous valuation declines in the late 2000s.

Stocks, on the other hand, are hit and miss, as we can see in the following examples. If, on January 3, 2000, you bought $100,000 worth of shares in:

• Apple, you would have $359,230 today.
• IBM, you would have $141,655, still not as good as your condo.
• Walmart, you would have $79,643.
• Microsoft, you would have $59,388. Whoever thought ten years ago that Microsoft would be anything but the biggest and the best.
• AIG, you would have $22,051 today.
• Delta Airlines, you would have $14,440 today.
• Lehman Brothers, you would have $0.00 today. They don’t exist anymore.
• Borders Books and Music, you would have $0.00 today. They are in liquidation.
• General Motors, you would have $0.00 today. They went bankrupt. Of course, you could have bought some of their new shares when they came out of bankruptcy.

I tried to make that portfolio somewhat diversified — technology, retail, insurance, travel, auto — to help cover some losses, but as you can see, real estate held its own versus the stock big boys.

I included stock splits, although there was only one that was relevant for the time period. I did not include dividends, but I also did not include the significant tax advantages of owning a home, not to mention that you were living in it and enjoying the American dream!

Real estate has and always will be a great investment and in Denver your money is even safer then most of the country. Call me today to make sure you have the information you need to make an educated decision.
Brendan Bartic
303-780-7430