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Real estate investing

You've probably read these statements before, but it is very important that you re-acquaint yourself with the truths that they convey:

* Out of all the different forms of investing, there is one that always increases in value over the long term. Real estate will always go up in value in the long run.

* Long term investing in stocks CAN show increases in value. Just look at the Berkshire Hathaway group of companies. To deny their success is foolishness. BUT, in most cases buying and selling stocks is risky and does not guarantee a long term increase in value. Any sudden change in tastes or technology can cause a sure winner of a company to cease to exist in months if not weeks. For example, just how many buggy whip manufacturers are there? There used to thousands.

* More people are being born every day. More people are immigrating from overseas. People need places to live. Unless we get hit with a worldwide economic depression, most people will have the money needed to rent or buy a place to live. Therefore, demand will always be increasing. Prices always go up when demand increases.

* There is a limit on the amount of land available to be developed. As one real estate investor once said "Nobody is making new land". Environmental challenges will force governments to increase the amount of "green space" there is. Eventually, there will be a scarcity of undeveloped land on which to build. Scarcity causes prices to go up too.

You don't have to be a rocket scientist to invest in real estate. The simplest way is to own your own home. Getting your finances under control will enable you to buy instead of rent. As you pay down your mortgage, the value of the house will increase. When you decide to sell, you'll find yourself with more money than what you paid for it.

There are a number of different ways that would-be real estate investors can get into "the business". If you already own your own home, and your finances are good, you can find the real estate niche that you're most comfortable with, and start investing. Finding fixer-uppers, buying foreclosures, or buying from "motivated" sellers are ways of investing in real estate at a bargain price. Flip the property or rent it out to others -- the choice is yours.

As with any investment, there is risk in investing in real estate. As we are seeing now, in some areas, housing prices are falling as people are defaulting on their mortgages. But you need to remember that a drop in prices now means a greater profit in the long term.

Before you do anything, you need to educate yourself on the different methods of real estate investing, and their pros and cons. Armed with knowledge and a good well-thought-out plan, you should be able to succeed. Good luck!

By: F. R. Woodner

Freelance writer Fran Woodner writes on real estate investing, and personal finances.
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