What is your take on buying real estate cheap, developing it (apartments, condos) as a investment strategy?

Ken ‏ @kenthecoder What is your take on buying real estate cheap, developing it (apartments, condos) as a investment strategy?

ANSWER:

Believe it or not, despite my non-stop articles on why you should NEVER buy a house (I really do think its a horrible life decision) I do think real estate will go up.

What!? Did I just say real estate will go up? Yes. I’ve always said it. BUT, never own a home. Never ever own one.

But it’s a natural that real estate will zoom higher. Because population will increase from 300mm to 350mm people in the United States and 50mm extra people will need a house. So demographics forces real estate up eventually and always throughout history.

That’s why Wall Street is buying up real estate. And what do the newspapers do? They act like idiots as usual. “Foreclosure crisis”. they want you to panic about something. Whatever. Go home.

BUT, I would never buy home for the reasons I’ve listed in countless articles. it’s the American religion to buy a house with a white picket fence. I don’t follow that religion. I explain why in “Why I’d Rather Shoot Myself in the Head than Own a Home”.

But if you believe real estate is going up there’s plenty of ways to invest in the stock market on real estate that is not liquid. You can buy a publicly traded REIT. That’s a stock that basically owns lots of real estate. So you can diversify and you don’t have to mow the lawn and the value goes up as real estate goes up. Plus REITS have to pay out 90% of their income as dividends. So knock yourself out.

I’ll tell you something that I haven’t mentioned in any of my articles on why I think owning a house is crazy.

First off, I rent. I live in a beautiful rented house by the river. I like to take my coffee and watch the river. On July 4, across from me on the river is West Point and they have great fireworks. I’m already planning my next move.

BUT, I also own a home. I’m divorced. And I own the home my ex-wife lives in. It’s a beautiful house for sale.

Why did I buy it? Because happy wife = happy life. Or, at least, that’s what I thought. It’s not really true.

So I can tell you, there is nobody more qualified to compare than me.

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