Bubble this. Bubble that. You hear the word bubble thrown around in relation to real estate nearly every day. Some people have a general idea of what the term means but let’s drill down and explain it in a little detail so we’re all on the same page.
The term “real estate bubble” refers to the belief that property in a certain area is overpriced. For one reason or another, there has been a buying frenzy bidding the prices up and eventually the demand dries up and prices fall. Nothing sinister about it. Markets fluctuate all the time. But, the conventional wisdom goes, when the bubble “bursts”, people will lose all or most of their real estate wealth.
This can be true if you happen to own many properties in one area with high land value to property value ratios. Situations like this can lead to rapid depreciation. At Empowered Investor, we avoid bubbles by specializing in low land value to property value properties. We also look for markets with less risk and more potential. Trust us. Those markets are out there and they always will be.
So don’t fall for the scare tactics lines of Wall Street shills and cable channel financial hacks. More lasting wealth is created by average people through real estate than any other investment in history.
That’s something to keep in mind. Why continue to invest in places (stock market) that has been proven to work only a very small percentage of the time and then usually only for those who had deep pockets to begin with? Real estate done the right way works for average people who might only have modest amounts of money to invest.
Have you ever heard of the turtle strategy? We like it and will talk about it next time.
