The Don't Sweat Guide to Your Finances by Editors of Don't Sweat Press

Author:Editors of Don't Sweat Press [Carlson, Richard Ph.D.]
Language: eng
Format: epub
Publisher: Hachette Books

50.

Invest in Land

Land is the only thing in the world worth working for, worth fighting for, worth dying for; because it’s the only thing that lasts,” said Scarlett O’Hara’s father in the award-winning novel and movie, Gone with the Wind. It is a refrain that has hit home with many people who want to make sure that their next investment isn’t going to suffer the same fate as their once-hot telecom stocks or shares in initial public offerings (IPOs).

As a result, many individuals have decided to invest their money in real estate, either by improving their current homes or buying vacation properties that can be used personally or rented out as an investment property. With all of this recent interest in real estate, land prices have mostly continued to hold their value, even though the number of people without jobs has risen since the stock market peaked in 2000.

Thus, many people feel much more comfortable investing their assets in land now, especially in contrast to stocks, bonds, or other types of assets. This isn’t surprising—land and home prices mostly have made steady increases since the end of World War II.

However, just because you invest your money in real estate doesn’t mean that it is a sure thing. For instance, all markets are cyclical, and the real estate market is no exception. If you end up having to sell your property at the wrong time in the cycle, you could lose money. There is also no guarantee on how much appreciation you will receive. What you thought might be a sure thing may turn out to provide only paltry returns.

If you decide to invest in a vacation property, you may have some additional risks beyond what you have investing in a house that you live in. For instance, if the vacation area decreases in popularity, you could lose money when you decide to sell your house. If you have purchased in a vacation area where there aren’t many home or condo units, and five years later, it ends up overbuilt, you could lose money or not earn the return that you anticipated.

There are no surefire investments. However, land does offer one way for the long-term investor to earn a solid return.

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