Real Estate is the #1 Investment

 
Thanks PBO31 for this photo of the Oakland Tribune at night.

It looks like the public still has real estate on their minds. A recent study done by Guidant Financial Group polled 1,000 self directed IRA holders and uncovered that 65% of them are considering real estate as a part of their retirement strategy. See more on this story at Business Journal.

Often in hot and cool markets I find that people tend to lose track of the fundamental reasons behind why real estate is a great investment. First, it gives you income through rents. Second, it appreciates in value over time. Third, it shelters income with tax benefits. Real estate is the only investment that gives you all three of these benefits.

Thus, it is not surprising that self directed investors look to real estate for their retirement returns. Just take a look at the Bay Area’s average residential real estate returns over the last 28 years. You can see that residential Bay Area real estate has a higher average appreciation return than the S&P 500. When you add in the cash flow and tax advantages of investment property it is obvious that this is a valuable investment instrument. What I do find surprising is that many of the real estate investors I meet have inadequate or weak strategies for acquiring, assessing and liquidating their investments in the Bay Area.