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Real Estate: The Solid Base in the Trifecta of Investing

Investors had to rethink their goals and prospects after the COVID-19 pandemic literally shut down almost the entire world including business and travel, various types of manufacturing and production, schools and corporate activities, and entire national and regional economies. The world is slowly going back to normal now but there are still questions that remain. One such question is: Will real estate continue to be a good investment?

For those with extensive real estate investments, especially in brand-new or renovated apartments for rent, the prospects remain good. In fact, real estate remains strong as an investment together with gold and certificates of deposit as in terms of value and safety. The volatility in this sector is not as high risk as other fields such as the stock and currency markets.

Never Go Wrong with the Essentials

Placing enormous sums of hard-earned money in properties will always be a wise decision, and it always has been. Like food and water, shelter remains part of the triad of the highest human material need in the same way that real estate, gold, and certificates of deposit are the trifecta of safe investments. Rich, poor, man, woman, child, regardless of age, country, culture, or creed — every single person in the planet needs a place to live in. The geographical locations, configuration, style, footprint, make, and cost may differ but the basic need for a roof above one’s head is universal.

While other investment gurus advocate for diversification, historical data and even some of the most respected investors really just narrow down their positions to a few areas where investment performance has been proven time and again. In a study entitled “The Rate of Return on Everything 1870-2015” released last year, researchers found that investments in real estate had consistently produced better performance when compared with stocks.

Invest in What You Can See and Control

Investors with high liquidity and risk tolerance may go for high yielding stocks and financial products that could produce good returns overnight. Others who have more modest means of investing would do well to reduce risk and position for long-term investments like real estate. Investing in multi-room, multi-use buildings, condominiums, or upscale townhouses will produce returns in regular cash flow or an increase in market value when these properties are given enough time to perform. Real property investment, in short, is not a get-rich-quick method for those who are only beginning to expand their portfolio.

The Oracle of Omaha, Warren Buffet, always says that investors need to put their money in asset classes that they understand. He simply will not invest his money and the funds pooled by his stockholders into investment opportunities that he has not studied carefully. “Invest in what you understand and what you believe will give you long term value”, is the advice he always gives to those who are new in financial planning and investing.

While real estate requires a substantial sum as an initial investment, it does provide the investor or property owner a steady, passive income stream. In general, the opportunity for value appreciation is always present even when the economy is experiencing some instability. Experience shows that residential properties are resilient given their ranking as a necessity to consumers when compared with other property types such as corporate buildings, hospitals, and even malls — all of which have been seeing a slight downturn as an effect of the pandemic-related lockdown and reduced consumer spending. In contrast to real estate, stock market investing is technical and there are many elements that are beyond an investor’s control such as market and economic fluctuations or volatility.

Location Is King

hands holding a house model

While real estate is truly one of the very few investments that provide relative safety and security, it does require some research. Buying just into any property listing is too much a risk. Location is still the mantra when it comes to the property market. Look for properties that are near where the jobs are so that there is a ready market of professionals and employees who need a place to live in the city. While suburb individual family homes are also good, a multi-use, multi-room, midrise building is the better choice in terms of property value. Looking for condominium projects that were built by industry leaders is also a good idea since their company had already made market studies and projects in the locations where they build.

While some would say that investing is too risky because of the economy and other factors, they may be making the mistaking of being overly caution, or worse, living with a victim mentality. What is needed to survive and thrive in today’s economy is to have an attitude of being an architect of one’s financial and overall life goals. We all need to chart and design our life directions, and eventually reap the benefits of our hard work and investments.

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