Real estate investments haven’t performed so well over the last couple years, as the bursting of the housing bubble really hurt the market and impacted many lives in a negative way. In fact, some people question whether real estate is the cash cow and successful market that it always promised to be.
But if you look at the rates of return on real estate over the past several years, the picture becomes much stronger than just taking the market at face value. In fact, in 2012, 2013, and now looking ahead to 2014, the real estate market from an investor’s point of view may not get much stronger than it is right now.
In 2010 and 2011 alone, the FTSE NAREIT Index, which measures real estate investments listed on NYSE, NASDAQ, and AMEX, returned more than 25 percent for the average investor! Understand, though, that the NAREIT Index primarily covers publicly traded companies which work in commercial properties, malls, office buildings, and more mass real estate and development.
For the average investor, public REIT investments allow the little guy to play with the “big boys,” while still retaining liquidity and security. Options like this make commercial real estate investments – and investing in real estate in general – a viable option for many people.
More than just public REITs, though, real estate is a decent investment on a small scale for any investor due to the bounce back of the housing market. Housing values are up, and have been consistently up for the last 12-18 months depending on your location across the country, though they still may not reach the double-digit levels of several years ago.
Nevertheless, both residential and commercial real estate are starting to bounce back from recession, and builders across the country are beginning to take on new construction projects, while investors have injected millions of dollars of capital back into the market for future investment and business.
It’s important to understand the economic backdrop while investing, but for the foreseeable future, the real estate market both residentially and commercially is on the rise. But the bottom line remains; the trend in real estate is your friend! Investors stand to make big money off their investments and assets if they approach it wisely and invest with the smarts and intelligence needed to see the pay-off in the long run.
Consider investing in real estate as rates and returns climb. Do not count on 20-plus rates that had become commonplace over the last several years prior to the housing market bubble bursting, but understand that the overall economic backdrop is improving. Rents are increasing, prices are increasing, and home valuations are still below their historic levels.
We may not be completely out of the woods yet as we still recover from the housing bubble that burst just a few short years ago, but as long as the economy continues to strengthen on the path it’s been heading, there is money to be made in the real estate market – whether commercial or residential – in 2014 and beyond.