As a general rule, homes appreciate about 4 percent or 5 percent a year. In a hot housing market like San Diego, homes can appreciate much more. According to DataQuick's real estate statistics, there was a 12.4 percent increase in the last year in San Diego County alone. Compare that to an investment in CDs that have returned 2 percent to 4 percent over the last two years, and it is apparent that with real estate you are getting more "bang for your buck."
Real estate vs. stocks
Compare investing in real estate versus investing in the stock market. Stocks, at times, can appreciate more than an investment in real estate and could easily earn the same if not more return on your dollar.
The flip side of the stock market is that it is more volatile compared to real estate and the investor must monitor the stock portfolio from moment to moment. There is no need to monitor your property every day.
With real estate you can buy more with less. For example, if you have $100,000 to invest in the stock market, you will get $100,000 worth of stock. If you take the same amount, you could invest that whole amount in real estate or you could buy a property worth $200,000 by taking out a mortgage for 50 percent of the property's purchase price.
Most of us understand the tax implications of buying a home -- you reap the benefits of home ownership when it comes time to submit your tax return to Uncle Sam. Property is very tax-friendly and has exceptional tax advantages. The interest on your mortgage and your property taxes are tax-deductible. Essentially, the government is basically subsidizing your home purchase.
An investment in real estate oftentimes makes you a profit and also allows you to save tax dollars.
The downtown paradigm
Over the last several years, downtown San Diego has been transformed into a hot bed of activity -- a desirable place to be and live. The planning committees did a great job of putting together a well thought-out community that is full of vibrant and eclectic retail locations and restaurants, sporting arenas, convention locations, as well as beautiful housing.
But most properties in downtown San Diego are staying on the market for a longer period of time compared to the boom of the previous year. Actually, over the last several months the downtown market has seen a negative percent change, which indicates a slowdown in the sale of properties and suggests that property is not moving as quickly. But why?
The market is saturated with new condos and condo conversions. There are several questions that a buyer and seller must ask themselves when pondering the question of real estate: What properties will give me the best return on investment for a short-term investment? What properties will give me the best return on a long-term basis? What area do I invest in?
The statistics and data that real estate agents use when "doing their homework" on the market is not available to the average person. You need an experienced and intelligent Realtor who not only utilizes the resources available, but also can point you in the right direction as to what will be the best investment for you.
The individualized approach
Clients hold their real estate agent to high standards of service and preparedness in marketing and showing homes. It is to be expected -- that person is accountable for finding their family a place to live. It is important for the agent to be able to assist a broad range of clients, and when marketing downtown properties, it is important for the agent to have successfully served that population and area before.
Clients seeking assistance want to know that the agent has done this before, and they want to see their track record.
It is also important to match people to property. Is the buyer a sports fanatic? Does the buyer love to sail? Taking into consideration the buyer or seller's lifestyle will aid in finding the right property for them.
Also, taking into consideration what goals they have for investing will also help the agent determine what property will fit their needs.
The bottom line is, real estate is a simple, reliable and consistent vehicle to convert a small amount of money into a large return. When looking to buy a home, look for an agent that is familiar with the area, an expert on investing in real estate, and that takes an individualized approach to your needs. Then be ready to reap the benefits of living in San Diego.
Cyriacks-Vella runs the downtown office of Platinum. For more information, call (619)-325-2820 or visit www.platinumpropertiessandiego.com.>