In the late 1980s, the aerospace companies moved out of Southern California and real estate took 5 to 7 years to come back, but back it came with a vengeance. At the turn of this century, the telecom companies abandoned the Denver area where they had recently arrived, and real estate dropped for years but is now on the comeback trail. Until we find a way to live without structure(s), residential real estate is here to stay and eventually will resume the upward long term trend.
The major benefit of owning residential real estate is using it or getting a financial return from others using it. Therefore, you can have a primary residence and a second home for your use or a rental home for financial gain. One can rent their place for short periods to help defer the cost, especially in unique locations.
Owning a rental makes more than sense: it makes dollars. In today's market with real estate prices down, you can establish a break even or a cash flow from your rental much more easily than in previous years and also set yourself up for a better capital gain as the upside is much greater.
If you have paid off your primary residence, you might get some write off you?ve missed in years past. With rentals, you can also get some depreciation, giving you some tax advantages.
Before some readers start writing to me, it goes without saying you can also lose money in real estate from a myriad of situations, but you can also lose money that was deposited in a bank. Baby boomers have now invaded the second home market, or some may say "created" the second home market primarily near or in desert, ocean, mountains and lakes. Baby boomers were looking for recreation, relaxation, companionship, camaraderie, reliving a youthful experience or capturing a long held dream.
Whether it is a second home or a rental, give it some thought. Inflation is very likely to raise its financially troublesome head and real estate has always been considered an inflationary hedge.
Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.