The US Economic Outlook and Investing in Real Estate the Safe Way

Like Gold and Silver, Real Estate is an excellent area for investing.  Most millionaires became wealthy through the proceeds of real estate.  It is a time tested strategy for wealth building and retention.   A lot of money can be made swiftly, and it is extremely appealing to many.

However, this must be done with caution.  It is easy to become overleveraged in real estate if one is not careful.  If we were to experience a stock market crash or economic collapse in the US, real estate would be adversely effected.  Think back to the Financial Crisis of 2008.  Remember the housing bust?  What has happened before can easily happen again if one is not careful.

Let us focus on rental properties and see how an investor can become overleveraged during an economic downturn.  Let's say the investor has many rentals and is making a nice income every month.  Then one day, the stock market bottoms out and his renters are unable to pay rent because they have lost their jobs.  If the investor has a mortgage on the property, he or she is still responsible to the bank for the mortgage even if the property is not generating income.  If we multiply this by 10 or 20 houses, it is easy to see how an investor can quickly become overleveraged. What happens when a homeowner stops paying the mortgage?  The answer is Foreclosure.

It is very important to sit down with an experienced and qualified financial planner.   Develop a cautious plan of action for real estate ventures and watch the bottom line at all times.  Investing in Real Estate is a wonderful channel for wealth accumulation if one plays it safe.