“But it will recover, and values will increase at least the rate of inflation.” What is the evidence of this? I think it will increase at the rate of wages (and there are some scientific studies to say that this is true).

My wife has lowered the rent to 20% less than the last tenant – still nothing. Guess what, at that price it’s not break even any more. Remember that was the premise that LLI said up above – break even. Just pointing out that it’s not the answer. It was break even then, but isn’t any more in this market. Of course you can’t just “find a new property” like you suggest, because that requires selling it (with it’s own costs) at which point it’s a loss.

In the end, Another Investor, has one good point, “astutely purchased” real estate. However, I could say that astutely purchased stocks out-perform read estate. There were stocks that went up 70% today. I don’t know too many real estate properties that go up 70% in one day.

Like stocks, the value of real estate does not increase linearly over time. If you bought high, you will have to wait for the market to recover. But it will recover, and values will increase at least the rate of inflation.

If a rental is vacant for three months, the rent is above market. Slow rental market? Lower the rent below the competition and pick your tenant. If the property is horribly cash flow negative, especially if the condo market in the area is weak even in a strong market, then sell. Find a more productive piece of property (or two) and put your money there.

Stock returns may beat those of unleveraged real estate, but astutely purchased and properly leveraged real estate will beat stocks. Carefully tended businesses that grow can do even better.

However, it’s worth noting that the down payment at 6% interest in some internationally diverse stocks (assuming after taxes, fees, etc.) may also produce $400,000 of value in 30 years (with no work)

The idea of this book seems to be that you make 5 million or more in 10 years, not $400,000 in 30 years.

You don’t need appreciation to make money on real estate. If you buy a $400,000 house with a 30yr fixed loan and it breaks even for 30 years, you have made $400,000 in 30 years.

I know its not as easy as that with maintenance and vacancies, etc… but the fundamentals are sound.

Even if the house is only worth $350,000 you own a $350,000 house free and clear.

It may work in the now, but it’s not cut and dry – invest in real estate – make lots of money and be rich.

Real estate in lot of areas is getting to the point where people’s income is growing proportionally to it. In the past when women were joining the work force and becoming lawyers and doctors families had two incomes, so why not sink the extra money into a home? Well that pushed up prices (in my opinion). However, there’s no magical third income coming to help push prices up higher. What’s going to be the catalyst?

I think the real estate market now is just like a lot of other investments now – you have to look at it from today’s and tomorrow’s perspectives – past performance is not an indicative of future performance. Money can still be made by buying low and selling high, but it’s not as simple as just buying anything as this book made it seem.

I have owned a property for 4 years now and it’s worth 10% less than what I paid for it. It’s in a desirable area with great jobs and growth. I think it’s just not as automatic as many make it sound.

-kate