Smarter Investing During A Recession
Posted on August 10, 2010
Filed Under California Real Estate, Land For Sale | Leave a Comment
Is today a good day to invest in real estate? Unless you’ve been living under a rock for the past year and hald, you’re probably quite aware that the U.S. is in a major recession. In fact we’re in one of the worst recessions in recent history. You probably also know plenty of people who have lost their jobs, homes, credit rating, and cars due to financial hardships. Thousands upon thousands of people have lost a significant amount of money in their investment portfolios. Thousands more have lost a sizable portion of their retirement nest egg.
Any time a country goes into a recession an natural response is for people to get scared and stop investing. They fall into the “protect their money” mode and don’t do anything with their investable income.
This strategy is probably one of the worst strategies to adopt during the current financial climate. Basic economics teach us that the way to make money with investments is to buy the investment low and sell the investment high. You don’t have to be a financial genius to understand that concept. It’s surprising however, that knowing this concept, so many people don’t put it into play when the timing is right.
A recession will definitely mean that you will lose money on many of the investments that you currently hold. This isn’t fun for anybody and it’s understandable why it may leave you a bit sour about further investing. The smart investors are the ones to realize that they can offset their losses and buy undervalued investments while the recession is under way.
A perfect example of this strategy is in buying cheap land. Many people who were on the verge of losing everything are quickly trying to unload any asset that they can to generate some quick cash. There is a lot of land out there for sale right now by people who will accept very low offers simply because they are in dire need of cash. Smart investors realize that by picking up cheap land or other cheap investments, they will recoup their losses that they incurred during the recession and then some.
There is a sizable amount of land for sale by owner right now. One of the main reasons for this is that people can’t afford real estate agents and are trying to sell their land themselves. This is good news for real estate investors as you’ll be able to pick the properties up much cheaper since the seller doesn’t have to pay the real estate agent a commission.
This is just one example of how a smart investor can profit during a recession. There are many more ways for clever and insightful investors to come out ahead when the U.S. eventually does recover from the recession. One thing is for sure, the country will recover and those who were smart enough to invest wisely while prices were so low will be significantly better off than those who simply held onto their money as sort of knee jerk reaction.
What’s your strategy during the recession? Do you see the light at the end of the tunnell? Have real estate prices hit rock bottom? Seeing the market bounce back? What’s the real estate market doing in your neck of the woods?
Please chime in with your comments!
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