The One and Best Reason to Own Real Estate as an Investment

July 22, 2015
Is real estate really the best investment?

"The singular and best reason to own real estate as an investment is to use leverage," said Stephen Lovell, a certified financial planner in Walnut Creek, California.

You heard it here first. The one and best reason to own real estate as an investment is to use leverage.

Confusing? Not sure what that even means? Let me help.

If you have some extra leverage lying around the house then it would be a shame to let it go to waste. You can use it to buy a real estate investment. It's the one reason you'd want to buy. It's also the best reason.

Many people seem to think you need to know what both ends of a hammer do, that a nail gun has nothing to do with the NRA, that electricity doesn't just magically come out of the dry walls, that water leaks can't simply be turned into decorative fountains, and that roofing is not optional even if there's a pool. Those people are wrong. Skill at repairing and maintaining a real estate investment pales in comparison to the power of using any excess leverage you might have built up over the years, much like the creosote that accumulates in a chimney. Dangerous. Use it now or risk the consequences.

There are some risks though, since there is just the one reason to own real estate as an investment. That means the worst reason is also to use leverage. We saw this many, many years ago when the housing bubble popped. It was so many years ago that many people don't remember it at all. And to be completely honest, they don't really need to remember now that the Fed has permanently put an end to recessions.

Still confused? Let me offer a real world example of the general concept.

The singular and best reason to own a 10-speed bicycle is to use the leverage of the 10th gear. Downhill? Sure. Uphill? Absolutely. Just put it in 10th gear when you buy it and always keep it in 10th gear as you ride it. Your legs will thank you for it! Don't be a wimp. Gears 1 through 9 are for f%^king p%^#ies! Every certified bicycle planner knows it!