Real Estate vs. Other Fixed Income – The Bond Alternative

cashflow zoneIt’s the first quarter of the new year and it’s time to look at investments that bring you regular monthly cash flow. First up is bonds. The yields on the benchmark 10-year Treasury Note have gone up from 1.72% to 2.02% since Sep 13 2012 when the Fed started the new bond buying program. The economy also seems to be picking up steam which means that bondholders could see yields rise and the value of their investments drop. For most people who are holding these as a safe haven at minuscule rates – this could be a double whammy. What’s worse, is investors are turning to some risky fixed-income instruments like Corporate Junk Bonds. Even these aren’t returning much for the risk these days.

Real Estate- a Rock Star?

So, Real Estate is looking more and more like a rock star in this group. Not that it isn’t in its own right. Consider the many ways. There seems to be a housing recovery under way and that helps people investing in residential rental real-estate as they can now enjoy appreciation, in addition to the nice monthly cash flow. Economic growth is picking up. Well that’s good too, as rents will rise and are a perfect inflation hedge. So, unlike the price dangers of bonds, the price of that rental house should do pretty well moving forward. Unless of course, we hit another housing bubble. But then again, we could also become Greece overnight, which seems rather unlikely given the current state of affairs. We feel this housing market has some distance to go. The key, as always, is to get into the right rental house, in the right neighborhood, with the right manager, that does it all for you. For that explore HomeUnion Cash Flow zones and get started on the bond alternative.

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