Trump University Wealth Building 101: Your First 90 Days on the Path to Prosperity by Donald J. Trump

Author:Donald J. Trump
Language: eng
Format: mobi
Tags: Personal Finance, Business & Economics
ISBN: 9780470100165
Publisher: Wiley
Published: 2007-09-28T04:00:00+00:00

V

O w n P r o p e r t y :

Th e R e a l E s t a t e P a t h

t o W e a l t h

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W h y Y o u S h o u l d I n v e s t

i n R e a l E s t a t e

b y

G a r y W. E l d r e d , P h D

T o achieve fi nancial freedom, and to enjoy a worry-free retirement that

provides a prosperous quality of life, no investment outperforms real

estate. Among the most popular asset classes, residential rental properties

have offered the greatest returns for the least risks. “But those results lie in

the past,” you might say, “What about the future?” Good question, but my

answer remains the same—with this caveat.

In the past, relative to stocks and bonds, most residential properties were

severely undervalued. That value difference still favors real estate, but it’s no

longer a slam dunk. Buying property today requires more education and more

market knowledge than you had to have during the great bull market in the

fi rst half of this decade.

Baby boomers scrambling to fund their retirements, pension funds racing

to accumulate assets to fund their future liabilities, and the already affl uent

searching for ways to enlarge their wealth are bidding up the prices of all

types of investments. The Dow Jones Industrial Average Stock Index now sits

near its record highs, yields on long-term government bonds are fl uctuating

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T R U M P U N I V E R S I T Y W E A LT H B U I L D I N G 1 0 1

around 4.75 percent, not far from their 40-year highs, and the median price

of a single-family house now sits above $225,000—more than twice the

amount recorded 10 years ago.

There’s no doubt: Today’s investors (in all asset classes) face times more chal-

lenging than any period since at least the 1930s. In most instances, earlier investors have already picked the low-hanging fruit. Yet the stomach is growling louder.

Challenge Doesn’t Mean Impossible

Since the late 1990s, sharp increases in property prices, along with a corre-

sponding relative decline in cash fl ows and rental yields, have led the major

media to persistently babble about real estate “bubbles.” Taking a cue from

these misguided journalistic missives, many people now believe that real

estate is no longer a good investment. But, if you expect a secular fall in prop-

erty prices, don’t hold your breath. Ever since the 1940s, such failed forecasts

have periodically littered the economic landscape. Do not err by focusing on

the low prices you missed in the past. Realize that 10 years from today—just

as in every previous decade—today’s property prices will seem low.

So, without a doubt, your efforts to build wealth should include residen-

tial rental properties. Although every type of asset class offers some promise,

when viewed in total, the benefi ts of rental properties are tough to beat.

When you invest in property, you can gain in 10 ways:

1. A competitive fl ow of income.

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