Is real estate REALLY a bad idea? If so, then what?
January 5, 2007 11:19 AM Subscribe
With the housing market slowing, where are people "in the know" putting their money so that it generates income or equity for them? How did they find out?
posted by salvia to Work & Money (19 answers total) 6 users marked this as a favorite
I'm 28 and trying to figure out an early retirement plan.
My expenses now are about 50% of my salary. I'm 5-6 months away from paying off credit cards, then I'd start investing or saving money for a down payment. I want to use that time to make a plan.
My current hope is that in 5-7 years, I can move to a smaller town with lower salaries and not have to work full-time. So, I'd need to have largely paid off that house and/or have income from rents or dividends. (Isn't this nearly everyone's goal? Maybe this won't be as easy as I think?)
I lean toward real estate because I work in city planning, so I know something about it and hear some of the gossip. I've been planning to buy real estate in areas I'd consider moving to (houses I could sell if I decide against that town), and/or a place here in the Bay Area that I could sell when I'm ready to move.
But I've been reading blogs on the housing bubble.
Still, nothing makes more sense to me. For the cost of a down payment, I can get renters to be paying a mortgage -- ie, equity. I wouldn't want to rely on appreciation (buying low and selling high), so I'd have to find somewhere that rents are pretty close to mortgage payments. (I know this is not easy, but a friend just did it, so I believe it's possible.) Appreciation may be slow, but it's not like I'm buying the property outright with cash I could put elsewhere.
Since I can't understand why people would put their money anywhere else, my question is -- what am I missing? Where are people "in the know" putting their money to accomplish goals similar to mine? Are there other options that make more sense in today's economy? Is there somewhere that money is going to triple (just sell a little stock and buy a house that way)? Is silver the next housing? And how do people find out?
I'm trying to find ways to keep on top of these things over time, so I'm interested in blogs and other ways to learn about this. Thanks in advance for any suggestions.