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Is Real Estate a good asset to invest in?

Apr 17, 2015 by Kirk in  |  Flag
5 Answers  |  6 Followers
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2 votes
John Essigman Level 17

Hi Kirk,

Asset classes are neither good or bad. There is a place for each asset class depending on various details …

Your question requires exploring some significant details such as your age, overall financial position, your income level and other investments/savings, correlation to other investments, cash reserves, risk tolerance, cost to acquire and maintain the investment, and will it be held inside or outside of a qualified plan such as an IRA or 401(k).

What are your investment goals and time frame… ? If you purchase real estate will it be financed, who will maintain the books/records, are you comfortable being a land-lord, are you comfortable owner-financing to a buyer, what type and how much insurance will you need, will it be held by you personally or through an LLC or trust?

Your question can only be answered once the context has been clearly articulated.

Warmest Regards
John Essigman

Comment   |  Flag   |  Apr 18, 2015 from Cleveland, GA

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1 vote
Richard P Taylor Level 17

I would agree with John's answer above. The answer is completely dependent upon each individual's situation. There are many variables that go into this process. As John has stated, it's really just another asset class. It could make sense to have a real estate as a piece of the overall pie, then again it may not. There may be other asset classes that fit you and your situation better. I wish you all the best.

Comment   |  Flag   |  Apr 20, 2015

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Hello Kirk,

Along with the excellent answers above a few aspects of real estate need to be considered as well. Many people investing in real estate need to truly understand the investment they make in this asset class. Most people are interested in direct ownership. This is an excellent way to own property. However just as there are many different types of stock people can own there are many different types of real estate one can own.

Real Estate can be very tax efficient, provide streams of income and produce capital appreciation (growth of invested capital). In real estate there are properties that can potentially produce all of these benefits or just a few. Real Estate can and does go down in value as well. The income generated form an investment in real estate also needs to be closely look at to understand how reliable that income truly will be.

It is always good to remember in real estate investing that liquidity, the ability to quickly turn your investment to cash, is not as high or easy to do as other investments someone can make. You must understand that this can be of great importance in your real estate investing career. The use of leverage is also often employed and can greatly enhance the returns on a real estate investment but it also comes with risk as well.


James M. Liotta

Comment   |  Flag   |  Apr 20, 2015

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Real estate is a great asset to consider for your portfolio. Here is a good post about why real estate is a good asset to consider for your portfolio: http://www.innovativewealth.com/alternative-investment/these-top-7-powerful-tools-can-create-legacy-wealth-from-real-estate/ . However many of the benefits of real estate are tied to positive inflation. Are you investing for cash flow or for appreciation? This also matters.

I hope this has been helpful.

Comment   |  Flag   |  Apr 20, 2015

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-2 votes

Income Producing Real Estate should be a good asset class depending on location.

Comment   |  Flag   |  Apr 17, 2015 from Houston, TX

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