[vc_row][vc_column][vc_column_text]Generalizations lead to many never getting wealthy because they avoid real estate.
Don’t make the same mistake. Think back to the 2008 housing bubble.
First came rapid growth in home ownership and subsequently, rapid growth in consumer debt. Many of those homeowners were not fit to pay those debts back.
Then, risky investment products like mortgage-backed securities disguised and expanded those bad loans. After some time, the fragile house of cards fell, and the entire world felt the effects of a depressed market. This depressed market led to a massive loss of assumed wealth for homeowners, and an enormous bailout for various companies deemed “too big to fail.”
Some might see this as a reason to shy away from real estate in general. We see this as an opportunity to educate. Below, we will go through two common areas of confusion in real estate investing and set them straight.
The uninformed often simplify concepts to make them easier to talk about and understand. One common example of this is talking about the “real estate market” as if it is one entity. In reality, the real estate market is made up of many categories. Those categories include retail, self-storage, warehouse, industrial, single-family, multi-family, etc.
This generalization leads to a myopic view of real estate as an investment.
Here’s why…
The 2008 crisis had nothing to do with retail, apartments, mobile home parks, or a variety of other asset classes. The 2008 crisis was specifically an issue with single-family homes. While the crash affected other real estate sectors, the primary victim was single-family housing.
To this day, pundits will talk about the “real estate bubble” of 2008, when the more accurate term is “housing bubble.” One example of a real estate asset class that did not suffer is mobile home parks, which did not experience any loss in valuation or income during the downturn.
In the 2008 crisis, the value of single-family homes dropped significantly in many major cities. Families were foreclosed on and had to find alternate housing. Where do you think they went? They simply rented.
The result is that while single-family home demand decreased, demand for rental housing increased.
Real estate cannot be simplified into a single asset class.
There are many different kinds of real estate investments to choose from, and each has their own set of strengths. Don’t put them all in one box and assume they are all the same.
The US economy has been in a bull market for almost a decade now. When investors see market highs, they start to worry and get timid about investing. If an investor understands real estate, he or she will know not to be afraid.
Real estate is made up of many different types of assets, some of which are more recession-resistant than others and they should all be evaluated on their own merits.
Are you still searching for an investment?
Don’t have a myopic view of real estate. Look at each asset class within real estate and choose the right one for you.
To find out about current investment options, give us a call 1-844-209-3153[/vc_column_text][/vc_column][/vc_row]