Kieth Weinhold – One Thing that’s Never Going Out of Style
There are myriad reasons that make real estate superior to other investment vehicles.
One top reason is the fact that it is never going to go out of style. Basic elements of primordial human survival are the essential need for food, shelter, and safety.
In fact, real estate is an investment that is not discretionary. That means that there is no choice. All seven billion humans on earth must contribute to real estate.
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People are constantly using real estate whether they own a home, rent an efficiency apartment, occupy an office cubicle, are on a boat in the Atlantic Ocean, is an astronaut on the moon, is squatting in a vacant home, or lives in a cardboard box beneath a bridge.
They’re all using real estate because they have to.
The fact that real estate is not discretionary speaks volumes about the durability of real estate investors’ chosen asset class.
Kodak was once a market leader in photographic equipment. But they continued to produce camera film and didn’t embrace digital. Their stock value fell several hundredfold. The company became obsolete. Investors lost.
Blockbuster video stores revolutionized how people chose at-home movies. But after this brick-and mortar store was undercut by Netflix and streaming, they lost significant revenue and filed for bankruptcy. The digital download made this an out-of-style model. Investors lost.
Even futurists do not predict that real estate will become obsolete anytime soon.
The world has a population of more than seven billion people, and it is growing every day. They will all need to live somewhere.
The demand for functional, clean, and safe housing will continue to exist.
Additionally, as a real estate investor, you have substantially more control over your asset than a stock or bond.
If you want to generate additional revenue for your apartment building, you can have a carport or a more efficient heating system added.
As a holder of Apple or Twitter stock, what are you going to do to increase these companies’ quarterly earnings? How will you help ensure they don’t become obsolete? Nothing. You don’t have that control.
The interesting thing is that financial commentators refer to stock investing as “traditional” and real estate as an “alternative”! How backwards is that?
People have coveted and “invested” in real estate since neanderthals lived in caves and lords used the feudal system to make serfs work on their estate.
So how in the world is real estate considered “alternative”?
Real estate is tangible. It is easy to understand. People can easily comprehend a business model where a tenant pays rent to an owner in exchange for living there.
How well does a stock or mutual fund investor understand the semiconductor supply chain for their Hewlett-Packard company stock? They probably don’t. Even if they did, they could not control it.
Look…there is a lot of uncertainty in today’s economy. Wouldn’t it be great if you could invest in something that people are going to need – absolutely need – in a good economy or a bad economy?
People need housing no matter what.
No investment is more lasting than real estate.
It isn’t going out of style.