Real Real Estate

BY
Eric Davis
,
Investment Advisor
December 11, 2019
·

For some, real estate is more than just an investment, and the money earned means less than the positive impact the investment can have on the community and environment. At Revalue, we call this three-tiered view of profit a company's triple-bottom-line – people, planet, and profit.  

Profit can be misunderstood by investors but is critical to the decision-making process. A standard return is selling one's home for more than it cost. Others may lease the property to another individual. We call these components of return capital and income, respectively.  

Now let’s compare real estate to two more common assets – stocks and bonds. Real estate and stock prices tend to go up when overall prices go up, but bond prices do not. Real estate and bonds generally have a minimum value in a bankruptcy; however, stocks can have zero value. Real estate is a “real" asset – you can touch and walk on it. You can't walk on a stock or touch a bond; trust me, I've tried.   

What does this all mean? If stocks or bonds go down, real estate may go down less, or even increase in value. During the 2008 financial crisis, cities like Dallas posted an increase in prices while cities like Miami saw prices drop.  When we look at our home city of Ypsilanti, it was hit harder than most other cities. However, Ypsilanti is unlike any other city, and history doesn't always repeat itself. So, including real estate in your portfolio – either as a direct investment (you buy a specific piece of property) or through a manager (you buy a share of a real estate fund) – can help balance your account value and risk during a downturn. 

If you’d like to learn more about how you can be the change you want to see in your community (thank you for the inspiration Ghandi), join us for our Ypsi Real Estate Investing Series this winter.  

Eric Davis

,

Investment Advisor

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