Is the Real Estate Bubble Going to Burst?
Author: Russ Whitney
Source: articleage.com
A question we're all hearing a lot these days is: "Is the real estate bubble going to burst?" All the financial pundits are eager to give their opinion, and it's often one of doom and gloom. It seems that some reporters and even some analysts are comparing today's real estate market with the rise and fall of dotcoms in the late 1990s. It is not an apples-to-apples comparison.
Real estate markets are local. The general market in one area can be booming while a few hundred miles away, the market is flat or declining. And there are strategies for investing in each type of market--growing, flat, declining--that will allow you to generate cash flow and build wealth no matter where you are.
Are the booming markets due for a bust? I don't think so. At the worst, we can expect to see the rate of valuation increase slow down in some areas, but we aren't likely to see values decline in most areas--and if we do, it will not be a significant amount.
This shouldn't have a significant impact on investors who own income-producing real estate. Here's an example to explain why: Let's say you own a four-unit apartment building. For the last three years, the property's value has been increasing at 10-15 percent per year, then suddenly it drops to an appreciation rate of just 3 percent. Are you going to reduce your rents just because your appreciation rate has changed? Certainly not. Your rents will remain in line with the market and will be generating positive cash flow while you continue to build equity in the property.
The real estate market, just like the overall economy, is subject to cycles. Savvy real estate investors understand those cycles and know how to deal with them. People are always going to need places to live and work. That means as long as there are people on this planet, there will be opportunities in real estate. Don't worry about the "real estate bubble" -- instead, focus on using proven investment strategies that will allow you to make money and build wealth in any market.
Russ Whitney, chairman and CEO of Whitney Information Network, Inc., is a recognized worldwide leader in the real estate investment and financial training fields. He is the bestselling author of Building Wealth (Simon & Schuster); Millionaire Real Estate Mentor (Dearborn Trade Publishing), and The Millionaire Real Estate Mindset (Doubleday). Russ Whitney has also produced numerous successful investing and personal development training programs on general wealth-building, real estate investing, stock investing, communications, selling skills, credit, and more. For more opinions and comments by Russ Whitney, visit his blog at http://www.russwhitneyblog.com
Is Real Estate the New 401(k) for Retirees?
Author: Russ Whitney
Source: download
Hitting the traditional retirement age of 65 does not necessarily mean you are ready to retire?at least, not financially. Social Security benefits alone are simply not enough for most people to live on, corporate pensions are rapidly disappearing, and even people who have done some retirement planning are finding it necessary to continue working well into their late 60s and even 70s. Two-thirds of baby boomers polled in a recent survey said the cost of living is too high today to truly retire and never work again. And it seems they are right: According to the U. S. Department of Labor, nearly 1 million people age 75 and older are working at least part-time.
Savvy boomers are growing their nest eggs before and after retirement by investing in real estate. In fact, by providing people with a relatively safe way to invest and generate cash flow well into their golden years, real estate functioned essentially as a retirement plan before such plans became part of the U.S. tax code. Of course, actual plans such as 401(k)s allow you to defer taxes, but real estate investing also provides you with a number of tax-saving strategies. My point is this: If you want a comfortable retirement, real estate can help you get it.
Let's return for a moment to the 401(k) model. If you happen to work for a company that offers this type of retirement savings plan (and not everyone does), you'll make your contributions (which may or may not be matched by your employer) and have some limited options as to how the money will be invested. In general, you can?but don't have to?start withdrawing funds at age 59?; with few exceptions, you must begin making withdrawals by age 70?. Depending on how much you have invested and how much your funds are yielding, it's possible for your 401(k) nest egg to steadily dwindle in the years after you begin taking distributions. And that's when many retirees head to work in grocery stores, fast food outlets, and other retail operations.
If instead you have secured your retirement with income-producing real estate and/or related investments such as mortgage notes, you will receive revenue from your investments without the regulatory restraints that apply to 401(k)s and other government-sanctioned retirement plans. What's more, your capital (the property) is likely to increase in value as it generates cash flow, allowing you to provide for your heirs without having to sacrifice your own lifestyle.
To take full advantage of the potential offered by real estate takes knowledge. There is a wide range of options when it comes to real estate investing; you need to understand what those are so you can make the best choice for your particular circumstances and style. You need to know which strategies work in what markets and how to recognize economic cycles so you know how to respond to them, because educated investors can profit in real estate regardless of the economy. You need to know what to look for and how to maximize the opportunities so you can make the most of your investments and still have time to enjoy the other things that matter.
So, is real estate the new 401(k)? Actually, it's the old 401(k). For hundreds of years, real estate has afforded security for retirees, demonstrating that the proven methods of smart investing and financial management have worked and will continue to work in all markets and all economic cycles.
Russ Whitney, chairman and CEO of Whitney Information Network, Inc., is a recognized worldwide leader in the real estate investment and financial training fields. He is the bestselling author of Building Wealth (Simon & Schuster); Millionaire Real Estate Mentor (Dearborn Trade Publishing), and The Millionaire Real Estate Mindset(Doubleday). Russ Whitney has also produced numerous successful investing and personal development training programs on general wealth-building, real estate investing, stock investing, communications, selling skills, credit, and more.
For more opinions and comments by Russ Whitney, visit his blog at http://www.russwhitneyblog.com; for more information about his training programs, visit http://www.russwhitney.com