For those with excess money to invest, today, real estate can be a viable option. The market is currently not as volatile as it once was, and thus it is becoming more popular. Indeed, according to Jake Adger, a Forbes contributor and chief economist at RealtyTrac, as the recession takes a bad seat, real estate can be “a good addition to [one’s] investment portfolio. At the end of last year he pointed out that:
“Investors need to think about all aspects of real estate investment including rental income, expenses, home price appreciation, and taxes…Investors looking for rental income will look for high rental yields now and in the future.”
Steven P. Rosenthal, President and CEO of Northland Investment Corporation, is responsible for the firm’s “strategic direction.” In terms of real estate investment the company seeks to “identify value creation opportunities….acquiring real estate assets diversified by markets, sectors and lines of business—and balancing the acquisition of high quality, lower risk assets with higher yielding, valued added assets and development opportunities.”
Real estate as an investment potential definitely has its benefits. CPA Mark J. Kohler is “convinced more entrepreneurs should consider rental real estate as an important part of their portfolio.” He lists five reasons why this is the case and then concludes: “The far majority of us will never get rich overnight. It takes long-term investing and a diverse portfolio to build true wealth. Don’t forget real estate as an important part of the equation.”
For those looking at possible options for investment, in a stable economy, real estate might be a good idea.
With low mortgage rates and growing prices, the housing market is on the rise. Still, the U.S. economy has yet to truly stabilize, making it hard to guarantee the continuing growth of the real estate sector. Some experts are warning potential buyers to be aware of and prepare for potential shifts in the market.
Reuters discusses several key points made by Stan Humphries of Zillow.com:
John Paulson has a solid history investing in the construction industry. Slow but steady increases in the market have pushed Paulson & Co. to support William Lyon Homes, a homebuilding company based in Newport Beach, CA. The company raised $217.5 million with its initial public offering earlier this month.
Despite hitting rough times in previous years, William Lyon’s sales jumped by over a third last year to $76.4 million. Last November, Paulson & Co. invested $30 million in the company. The firm now owns 21% of the stock as well as 10% of the voting power.
The recent investment indicates that Paulson may be shifting his focus back to the housing industry as the market improves. Prices of new homes are on the rise, and have increased by 11% since this time last year. According to the Financial Post, a Brooklyn townhouse on sale for $950,000 attracted over 300 visitors. While many investors and entrepreneurs are placing their bets with homebuilders, others are approaching the market from other angles.
Bill Smead of Smead Capital Management, for example, explained that he bought shares in Home Depot because it sells home construction equipment, and also invested in banks with inventories of foreclosed homes, like Bank of America, Wells Fargo and JP Morgan.