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Real Estate Investment And What You Shouldn't Do With It By: Curt Cloyd – Director Personal Wealth Academy, LLC Of late, I've been checking out a lot of websites that publish articles on real estate investment. And I just ran into this interesting article at BadMoneyAdvice.com that seems to mock Warren Buffet's thought and the public's general perception with the current real estate market. According to the general public and estimated data, the real estate market in the U.S. is in a decline. The prices of homes are dropping significantly and home owners tend to owe more than their overall house value. The number of homes ending up in foreclosure is increasing and they aren't being sold as quickly as one can expect. But despite of all that, Warren Buffet made a bold suggestion that if he could, he'd buy a hundred thousand single family homes. That was a bold statement indeed. How can a smart investor such as Warren Buffet actually come up with such an idea when the market is actually in a downturn? Well... there are actually some specific reasons for it. But before I talk about that, let me tell you something. The real estate market isn't in a downward spiral. Do not trust what the news channels, experts and papers feed you. What they have is largely estimated data that actually isn't congruent with the reality. Here's an example: In the first four months of 2012, the U.S. housing sales rate was actually less than 4.5 million. In fact, the number of units sold were quite low. But in the month of May, the number of units sold increased to 4.55 million. This made the experts predict that the sales would go up to 4.62 million in the month of June. As a result, a lot of construction projects began and there were a lot of housing starts. But the number of sales actually dropped to 4.37 million in the month of June (a significant drop). When you thoroughly analyze the actual reason for the sudden spike in sales in the month of May, you can actually find that the employment had reached a record high and the interest rates offered by Banks reached their lowest. This resulted in increased demand and higher costs. And within a month when the demand dropped, the property had to remain unsold for a while. Desperate home-owners who needed cash often resorted to discounting the price significantly in order to make the sale happen immediately. The truth is... the real estate market doesn't stink. It's not in a downward spiral. The prices are actually stable in a lot of areas (except for some areas). With that said, here's why I think Warren Buffet's idea on purchasing hundred thousand single family homes is a wise strategy... 1. Demand The truth of the matter is single family homes will always be in demand. More and more people are likely to rent and purchase single family homes in the future. The number of single families is constantly on the rise. Therefore, you'll always have demand for a single-family home regardless of the locality. In every locality, you can actually find a bunch of individuals that are looking for a single family home. On the other hand, commercial or apartment properties don't do very well in a lot of areas. 2. Rental Want some passive income? Well... then consider having 10 houses that each bring in a monthly rental of $1200 per month. That's actually about $120,000 a year without you having to do any work. It's regular income that you can actually use to boost your business, pay for your expenses, etc. Now... building a rental real estate business requires consistent cash flow. If you haven't still developed a real estate business that brings you consistent cash flow, we strongly recommend that you take a look at the following page - http://taxsalephd.com/page1.php
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