There are basically three main reasons real estate is an excellent long-term investment. The first reason is the law of supply and demand which states the less of something there is, the more demand there is for it. Since they stopped making land a long time ago, and because the world population is constantly increasing, the demand for land increases daily. The second reason is called leverage. Leverage may be defined as doing more with less. One example of leverage is OPM or other people’s money. An example on a large scale would be buying a home. You could purchase a $150,000 home and perhaps you would only be required to pay a 3% down payment ($4,500). You’ve now “tied up” a piece of real estate worth $150,000, and you have only invested $4,500 of your own money. Due to the ever changing rules and guidelines of lending, you were once able to attain 100% financing without putting any money down. No other area of investing offers such fantastic leveraging opportunities.

The third reason real estate is a terrific long-term investment is market volatility. Also known as the “ups and downs” of the market. Unlike the stock market, bond market, futures market, commodities market and most other markets, real estate values do not jump around from day to day. Homes and land do not lose 93% of their value in an afternoon of rough trading. Real estate, homes and land are far more stable investments. This is one of the reasons that banks are always eager to lend you money to buy a home, but are never interested in loaning you money to buy stocks and bonds. They know that real estate is a solid investment, and they know that real estate almost always goes up in value. They know their money will be safe.

Real estate can be extremely rewarding and exciting to learn about and experience. As with any pursuit, one must know what he wants and be willing to stand by that desire until it is realized.

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