Wow! Some days the universe smiles upon on all of us, but today that light shines on me. Well, maybe not just me, but it seems like it. Today, I get to talk about gold again, thanks to an interesting question from a reader.
- Is rental real estate possibly a substitute for gold? Its value is likely to rise as more money is put into circulation (Fed, QE3); however, its actual return (rents & appreciation) is determined by what people have to pay which is determined by employment. In the end, I think this is a question of employment availability and wages.
First, let me directly answer the question. Real estate is not only a substitute investment for gold, it is preferable substitute, if it is selected as you would any investment – carefully. It is certainly much less volatile. I would also argue (as I have done before) gold will go down, as the global economy improves, but the opposite will happen for real estate.
As to the value of RE rising from QE3, I don’t see that as a direct connection, but I do agree the ROI is dependent on the market fundamentals. Supply and demand are the two big fundamentals, and in this sluggish US real estate market, the supply and demand equation is working to the positive in many sectors of the country.
As always, my job is to break through the noise and some of the loudest noise out there is the US unemployment rate is somehow keeping the US in recession. This is far from reality.
I agree far too many folks are out of work or are underemployed, and the economy has a ways to go to rectify this terrible situation, but the fact is the vast majority of US workers are working. The problem with the slow economy and the real estate market is fear. As soon as this dissipates (and it seems to be dissipating), folks will begin buying up real estate again, especially with the historically low mortgage rates. Right now, the major buyers are investors, and that should tell you something about the viability of the market.
So, don’t wait for the employment situation to change. Get to work finding the place where the RE market is strong and getting stronger, a place such as Ogden Utah. The city was just ranked as one of the top ten growing cities in the US (#6). Business is moving there and so are people. I know this because I have been studying this area for some time, and I like it. I like it so much I am just about to close on my first rental property there. As you might guess, I clearly prefer investing in real estate as opposed to investing in gold. Maybe you should as well.
As luck would have it, I have another question from a reader, a very simple question.
- What is the VantagePoint software?
VantagePoint software predicts whether a market will be higher or lower in two days. It utilizes neural networks, intermarket analysis, and sophisticated algorithms to achieve its reported 86% success rate. This is the simple explanation. If you want to explore the software more deeply, go to http://vp.tradertech.com/ .
Trade in the day; Invest in your life …
