Should you put your money in real estate this year?

Jan 10, 2012

It's been hard to make money in stocks and bonds lately. 2011 was a great year to sell gold, but prices are too high to buy it now. Where does that leave us?

On this week's Money Matters, financial commentator Greg Heberlein tells KPLU's Dave Meyer that 2012 might be a great year for investing in real estate.

Prices have been devastated by the incredible, multiple-decade run-up of values in concert with the stock-market explosion. Property became so overpriced that many buyers have had to walk away from their mortgages.

When homes are being sold below their appraised value, as many are now, it is well worth the time to take a look.

For the renter, buying a home has obvious merit. For owners, buying a better home makes sense when values have plunged.  It's also tempting to buy a bargain-priced home and rent it out while waiting for prices to rise again.

Don't want to be a landlord? There are other options. You can hire a property manager to handle rental properties, but that cuts into your profits.

You can invest in real-estate stocks or partnerships. The simplest option may be a REIT (real estate investment trust) that you can buy and sell just like a mutual fund.

If you believe in "buy low, sell high", the prospects for real estate seem excellent.

But with all the uncertainty in the marketplace, no one will blame you for sticking with the safety of a federally insured CD.

Refinancing your mortgage is also a safe bet. With 30 year mortgage rates dipping below 4%, this could be a once in a lifetime opportunity.