Survey: Real estate is the best investment
May 2-8, 2016
Submitted by Libby Sheard, association executive for the Little Rock Realtors Association
Americans ranked real estate as the best long-term investment, even over stocks and gold, according to a recent Gallup Poll of about 1,000 U.S. adults. Real estate has been the top investment choice for the past two years, and its lead is increasing over four other popular investment choices.
Thirty-five percent of Americans selected real estate as their top investment choice compared to 22 percent for stocks and mutual funds; 17 percent for gold; 15 percent for savings accounts/CDs; and 7 percent for bonds. By comparison, 34 percent of Americans said gold was their top long-term investment choice in 2011 while 19 percent said real estate.
“As the average sale price of new homes in the U.S. increased from $259,300 in August 2011 to $348,900 in February of this year, the percentage of Americans picking real estate as the best long-term investment almost doubled,” according to Gallup. “During approximately the same time span—from August 2011 to April of this year—gold prices plunged from $1,910 to $1,254 per ounce, and the percentage thinking gold would wbe the best investment was cut in half.”
The poll also revealed the following:
Men are more likely than women to say gold is the best long-term investment. Women tend to favor savings accounts more so than men.
Those surveyed who are younger than 30 years old were the least likely age group, at 26 percent, to think real estate is the top investing choice. They are most likely to choose savings as the top long-term investment choice.
Renters (32 percent) and homeowners (34 percent) are about equally as likely to choose real estate as their top long-term investment choice.
If you are considering real estate investing, below are some tips from Barbara Ballinger, from her article “Investment Allure: Get buyers on the gravy train (NAR, June 2015)
1. Have adequate insurance and liability protection in case of a lawsuit. Aim for a dollar figure that completely covers assets, which may require an umbrella policy, says Michael A. Quintana, an agent with Insurance Headquarters in Cape Coral, Fla. A lender may also require flood insurance if the property is located in a flood zone, and even if not it can be prudent for investors to purchase it for just-in-case scenarios.
2. Pass along costs. The competitiveness of the market and whether the rental is annual or seasonal usually influence what owners cover. But almost everything’s negotiable. Most landlords typically pay real estate taxes, maintenance when equipment or housing parts break, and building insurance. Long-term renters may cover utilities, daily/weekly maintenance such as mowing and trash pick up, and insurance protection for their possessions.
3. Specify rules and regulations in writing. Whether you say yes or no to pets is a personal decision, but know that such restrictions will limit the pool of renters. When it comes to the number of people permitted, you can limit that too, but many communities have guidelines that state no more than two people per bedroom, so know the local laws. Turner provides tenants a list of house rules such as keeping noise down between 10 p.m. and 6 a.m. and not smoking.
4. Plan for the worst case. While renters may seem as commonplace as ants swarming around a summer picnic, the situation can change on a dime. Many first-time landlords don’t grasp the financial challenges that may arise. “They may not realize a property can sit vacant for a month or two or a refrigerator may conk out, and either can wreak havoc on a well-planned budget,” Turner says. At such times, he suggests offering a free month or two of rent, flat-screen TV, or lower rent as an incentive. Sturwold prefers to focus on renters’ specific wants--free Wi-Fi for his millennials rather than a TV that will wear out, he says.
Source: National Association of Realtors
