When most investors become fearful of a looming dip in the Stock Market or inflationary pressures, the “gold-run” is on. However, if we take a close look at one particular alternative, it leaves gold in-the-dust in almost every category… Real Estate. Not just the real estate you’re thinking about, but real estate in a new way. A way that has been hidden from us for all these years because the big Brokerage houses haven’t offered the product and therefore didn’t make anyone aware of it.
This types of investments are called Real Estate Securities.
In comparison to just buying real estate, the real estate securities allow you to diversify your investment amongst many properties in many locations. They also allow you to use passive management; no fixing toilets for you. This diverse way of investing in real estate tremendously reduces the big risk that is typically associated with buying real estate. For example, if you buy a condo in Mission Valley, you might get a great interest rate, great price and heck, maybe even a great tenant. But, if the Chargers Stadium moves downtown and your tenant loses his job, you’re screwed. When you buy a real estate security, you’re buying a small percentage of ownership in a large pool of property in many locations.
Now let’s compare this form of real estate investment to Gold. Both are hard assets, which is good. They both afford something more than just a piece of paper, like a stock, bond or mutual funds. With Gold, you have one desire; that the price of gold per ounce will increase. That’s the only way you make money. Unfortunately, that usually happens only in really bad economic times or high inflation periods. So, you are essentially rooting for things to get bad in order for your investment to pan out! With real estate securities, you get the same hedge against inflation, as real estate rents and prices will also increase with inflation, but you get something Gold simply can’t offer. Cash-flow.
While your Gold will just sit in the safe collecting dust and hoping to go up in value, your real estate will pay you every month your pro-rated percentage of the rent profits. Your money will be working for you to earn money and not JUST appreciation. However, you won’t be surprised to learn that your real estate securities can also increase in value as well. If you invested $10,000 into a security and it increased in value 10% over the period of time in which you owned it, then you will get $11,000 when you get out, even though you got paid every month in the meantime. Pretty sweet huh?
Other Topics discussed on today’s show:
– GOBIE H20, the Water Revolution is upon us and this IS the “next big thing” in the way we all drink water
On-Air Guests today:
Ari Hoffman, COO of GobieH20