Real Estate Investment: Returns
Q: Can we know our normal rate or returns?
First of all, thank you so much for the great response I’ve had to my investment advice columns! Seeing so many people take advantage of my content makes me want to write even more! Im working on some great stuff write now, join my mailing list to keep up! I get asked about real estate risk and returns all the time! I don’t want to venture off into the woods about risk TOO far, but these questions are worth answering!
The most important factor in returns is our local real estate market. With just a brief look around Pullman, you can see the reasons for my return rates! The university provides the rental market with a constant swarm of new renters, which maintain the existing market prices. We also have many families moving into Pullman, that will rent as they establish themselves in the new region. Pullman’s real estate market is very stable because of our economic climate and the university’s housing needs.
These are just a few of the reasons I believe 3% to be a very attainable rate of return. Having been a Realtor for years, I get to see all the trends of our market, and 3% is incredibly conservative for standard appreciation.
Compared to real estate, I look at stocks and other investments as “The Wall Street Casino.” Years ago, stocks were a great investment and you could calculate returns, constantly making good money. In an era of electronic trading, insider trading, foreign investors, and unprecedented levels of corruption, the average American investor is left out to dry. Do you really think that some mutual fund manager/stock broker dealing in the cesspool of Wall Street has the same level of passion or appetite for risk that you do? Of course not!
Real estate investing is cyclical in nature and not nearly as glamorous as Wall street. Imagine where YOUR returns would be today if you invested in local real estate instead of “The Wall Street Casino!” You also never hear about local investors getting caught in that “big scheme” that cost them all their money. The missing part of the story is all the wealth that is accumulated through investment in real estate. Wise investments in local real estate will get you safe and steady returns for years to come, without ever having to “risk it all.”
If you have more questions about real estate investing, or would like to talk more in depth, please call! I can’t wait to hear from you!
See you next week.