Well it has now been well over a year since the sinister attacks of September 11, 2001. Many investors, including myself were wondering at this time last year, what would become of the real estate market in the wake of such unusual and world shaking events.
Interestingly enough, the real aftershock was brought about not by terrorists, but from within. The corporate accounting scandals of 2002 have had far reaching effects that no one ever could have imagined. Who could have guessed that so many major corporations (and many minor ones) were cooking the books and faking those large profit margins over the past few years. This has had a devastating effect on the stock market, and on IRA and 401K holders in particular.
One of the things I have always loved about real estate investing, as opposed to the stock market, is the fact that no one can intentionally manipulate the housing market the way that stock prices can be influenced. Even the biggest investor in town cannot do much of anything to cause your property to go up or down in value suddenly. While it is possible to have events affect real estate prices, those events usually move very slowly in comparison to what we have seen in this years stock market decline.
Residential real estate is a very stable investment for one simple reason: Everyone has to have a place to live. While most stock holders watched helplessly while their IRA’s and 401K’s declined as much as 50% or more, my parents, who own no stock, but do own 5 rental properties free and clear, have happily watched their real estate grow equity and income at the rate of about 20% per year. And this year will be no exception.
Investing in residential real estate is simply one of the smartest things you can do. And with interest rates at their lowest levels in 40 years, it is really a no-brainer. AND, considering that you can take what’s left of your IRA and invest it in mortgages secured by real estate, the only question left is “What the heck are you waiting for?”