Should You Invest in Real Estate Now?

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On Saturday I start a brand new seminar. Most of my seminars are about tax strategies. This one is part tax and part about creating passive income.

And, for once in my life, I’m not highlighting real estate as the best strategy for everyone. This isn’t going to be a post about why real estate is a bad investment or why anyone who invests in it is a loser. Real estate investing works, but it’s not the only game in town and I think we’ve lost sight of that.

Why invest in real estate? Most people I know are looking for passive income, appreciation with leverage, tax breaks, a place to park their wealth and a separate stream of income. It can also be used, just like any other business inventory item, as a commodity to create quick cash.

Real estate is down in value, which means there are great values, but it’s uncertain how quickly you could flip them. So, to be honest, I’m not sure the flip market is a good idea unless you really know what you’re doing and have the liquidity to carry a market timing issue. If you can buy cheap enough and there is a rental need, you can definitely make some money. For example, I was part of a teleseminar this past week by Matt Bowles of on the Brookhaven project in Mobile, Alabama. There is a waiting list of renters for properties right now. This could be a great time to invest in Alabama.

The tax breaks are difficult these days for real estate investors. The IRS is specifically targetting real estate professionals for audit and unfortunately, many taxpayers didn’t properly file their past tax returns. So, they’re falling into the IRS’s trap.

And finally, leverage. Loans are very hard to get these days. Even if you qualify, will the person you want to sell the house to be able to get a loan?

So, how did real estate do on the things you might be looking for: passive income: possibly, depends on the area, appreciation: not right now, not certain when it will turn, leverage: hard to get loans these days, place to park wealth: if you’ve got the liquidity to wait it out, this could be a good time for this strategy, and a separate stream of income: it would be different from your other income for sure, but the secret is to actually CREATE income.

Should you invest in real estate? It depends.

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