Real estate is one of the most uniquely beneficial investment vehicles available and also one of the safest investments you can make. You don’t hear of very many real estate investors going bankrupt. How come? The real estate market moves slowly and because it moves slowly it gives you the time to protect yourself against adverse markets.

We have all heard of the story of the stock investor who had a significant portion of his savings in one or a couple of stocks. He goes on vacation and comes back to find that the company he owns stock in has had some scandal which tank the stock price and his investment while he was away, Enron or Worldcom anyone…

Can this happen with a real estate investment? Yes, but only due to an unexpected event, usually climactic or geographic catastrophe…earthquakes, floods, etc. Real estate typically rebounds from these events quickly however. For the most part, real estate moves with the economy of the geographic area it is located in. For example, Southern California which has had a pretty consistent appreciation of around 7% over the last 40 years including the three or four down periods continues to build less new homes than people moving into the area, simple supply and demand. If there isn’t enough property inventory to meet the demand prices move up. As a real estate investor, can you see what the supply and demand looks like? Sure. Just ask you local Realtor for a report on active inventory vs. sold inventory and the average days on the market. This is usually a pretty good indicator.