Why now is a Great Time to Invest in Real Estate

“The major fortunes in America have been made in land.” But don’t take my word for it, because I didn’t say it. John Rockefeller did. The same Rockefeller family whose name is on that famous little plaza in New York City and who is known for being one of America’s first industrialists as well as philanthropists.

Despite all the negative press surrounding most types of real estate (especially housing right now), it continues to be an asset worth investing in. Real estate, as its name explicitly states, is real. It is something tangible that you can actually experience with the five senses. That is part of the appeal of investing in it. You know what you are getting. Whether it is an office building, a storage unit, a duplex or piece of raw land, with real estate, what you see is what you get.

In the current market environment, there are many assets that are quite the opposite. It is not “what you see is what you get”, but it is more like let’s take a stab in the dark as to what this asset is worth. That is what is causing so much of angst amongst investors right now. These so-called “toxic” assets that everyone keeps talking about are toxic because no one knows what they are worth. Experts who understand these complex derivatives and other securities that have been created struggle to explain them to the average person.

Real estate, in most cases, is much simpler than that. You know what you are buying. It is real, and not derived from some complex formula. You know how big it is, what sort of cash flow it can produce, and it is real, something actual and concrete that you can wrap your arms around.

Another benefit to real estate is that they aren’t making any more of it. It is finite and limited. It is not a commodity or a widget that can be manufactured in China or India. There is only so much of it to go around. Sure, there are times when the market can get oversaturated with office buildings, or even houses, but the simple truth remains that there is a limit that has already been set on how much land there is in your city, state and in the world for that matter.

City and state governments do the best job possible to regulate and zone land so that there are not inordinate amounts of certain types of zoned land that create an oversupply of a certain type of real estate in a given neighborhood. While the process is not perfect, it gives an investor in real estate a type of safety net that his investment will be a sound one.

Real estate, like most other assets right now, has taken a beating in the current recession. Values on everything from shopping centers to raw, unimproved land have declined in value. For that reason, now is a great time to buy. There are incredible deals to be had right now in most markets in the country.

The herd mentality that exists when the market is good encourages people to buy at the exact wrong time. People say to themselves, “I must buy now because prices are going to keep going up.” In reality, this is when people should listen to the little voice in their head that says that values cannot go up forever.

In times of recession, the herd mentality also drives people to make irrational decisions. People say to themselves, “I can’t buy now, we haven’t reached the bottom.” The truth is when the bottom arrives, they may have already missed it. It is very difficult to time the bottom of any marketbe it the stock market or the real estate market.

Real estate continues to be an asset that wise investors will purchase in good times and in bad. It is something real and tangible that is limited in quantity. Now is a great time to research your local area for great values in real estate.