Investing in Real Estate : How is it different from other alternative Investments?

Investments, Alternative investments, Stocks, Bonds, Gold, Real Estate, Risk, Returns, Diversification,
Here are some successful people talking about investing in real estate :
“Ninety percent of all millionaires become so through owning real estate.”
-Andrew Carnegie
“The major fortunes in America have been made in land.”
-John D. Rockefeller
“I would give a thousand furlongs of sea for an acre of barren ground.”
“Buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy.”
-Marshall Field
“The best investment on Earth is earth.”
-Louis Glickman, American business executive

So, obviously, real estate can be a good investment, provided the investment is planned properly.
How RE is different from any other form of alternative assets?
– There is Low correlation with equities in the short run only
– However, Both equities and RE are adversely affected in a recession
– RE investments produces apparent low volatility
– Location specific investments – The local factors affect the real estate prices a lot more than global factors (unlike commodities, stocks, gold etc which are impacted by global macro economic factors)
– Interdependence of land uses
– Large transactions which are typically leveraged by use of substantial amount of debt.
– RE investments typically habe long gestation period
Here are some of the reasons for Including RE in Investment Portfolio :
– RE investments can produce high absolute returns
– It is a Hedge against inflation
– Portfolio is diversified to reflect overall investment universe
– It provides tax benefits – may not be available in any other alternative investments
– Suitability to various investors
– Risk tolerant investor
– Risk-sensitive investor
– Inflation sensitive investor
But as Raplh Waldo Emerson says “Fear always springs from ignorance”…. The first thing is to obvious do a lot of planning and become aware about the purpose of investments


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