Boomers Believe In Real Estate

Here's something that I could have told you: according to the October 20th Baltimore Sun, baby boomers think that real estate is the right place to put their money.

It makes sense. After all, the boomers' parents made it big when they sold the family home. Houses that were purchased for a couple of thousand dollars, sold for hundreds of thousands of dollars. You'd have to be a heck of a stock market player to do that well with a single stock purchase.

Even the best selling financial advisors will all say, "Buy a house." For that matter, the statistics are with you on real estate and wealth building: the wealthiest among us own their own home, and likely a couple more. If you read any of the most popular financial writers, they will all point to owning real estate as a great way to get ahead.

Are we being suckered?

In the case of investment property that we are renting out, we will likely do okay. After all, most of us are smart enough to get a rental property that will "carry itself"; in other words, the income stream from the property also covers the costs. We may have to pay for a major repair, but we aren't likely having to pay for any of the regular maintenance or ongoing costs of the property. So, even if the value of the property drops, we'll still get money out of it, without a big cost to ourselves.

It's not the same if you've invested in a big "dream home". If your home drops in value, you are losing real equity, and there's no "income stream" from your primary residence, unless you have a cozy nanny suite renovation done.

Having said that, I too learned at my father's knee, and he was a real believer in real estate. I haven't yet bought a place to rent, but I certainly could see myself doing that. As for upgrading my own home: after watching the market for the past year or two, I still can't decide if the market is going to crash or not. In the meantime, we're on the sidelines.

Michael

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