Survey Says Americans View Real Estate as Best Investment Option

Is Real Estate Really the Best Investment? Americans Think So

Last decade's housing bubble is becoming a distant memory. Mortgage rates are near historic lows, interest-only loans are back and everyone loves real estate as an investment again.

More than 1 in 4 Americans (27 percent) said real estate was the best investment for money they would not need for at least a decade, according to a new Bankrate.com survey of 1,000 investors. Cash came in second with 23 percent of investors, only 17 percent said the stock market is their preferred place for long-term money and just 5 percent said they would put their long-term money in bonds.

It is the first time real estate has taken the top spot in the three years Bankrate has been conducting the survey. Cash was investors' favorite in 2013 and 2014. "It begs the questions if more Americans are once again viewing real estate as a golden ticket," said Greg McBride, chief financial analyst for Bankrate.

Credit is harder to come by than a decade ago and lenders face more regulations, but financial advisers say many clients are catching the real estate bug again.

"Just last week, a high-tech corporate boomer client with no experience in renovating and selling real estate told us he wanted to go into flipping a property with his friend, who does this for a living," said Jon Ulin, certified financial planner and managing principal of Ulin & Co. Wealth Management in Boca Raton, Florida. His client wanted to liquidate 25 percent of his IRA to invest in the project and told Ulin it would "diversify" his portfolio.

"I advised him that putting a quarter or more of his life savings into flipping and renovating one property with the hopes of making a possible 14 percent profit is not a good idea and a gamble," Ulin said.

But real estate has curb appeal that other financial assets can't match.

"For many investors, the tangible nature of real estate simply offers much more peace of mind than the intangible nature of stock and bonds," said Stephen Doucette, a certified financial planner and vice president of Proctor Financial in Sherborn, Massachusetts. "Real estate pricing also adds peace of mind to investors as pricing seems more stable because it is not updated daily by the media."

Investors should weigh the long-term return potential of real estate investing compared with other assets.

The S&P/Case-Shiller 20-City Composite Home Price Index, which measures the value of residential real estate in 20 major metropolitan areas, has generated a hearty annualized 9.2 percent return over the past three years through June 30, but produced an annualized 0.4 percent loss over the past decade. Meanwhile, the S&P 500 index, a broad measure of the U.S. stock market, grew an annualized 14.8 percent over the past three years and 5.87 percent over the past 10 years.

But investors with good credit can borrow to buy real estate, which can enhance returns — or magnify losses, depending on the market. "The singular and best reason to own real estate as an investment is to use leverage," said Stephen Lovell, a certified financial planner in Walnut Creek, California. "Without it, your return on investment tends to be about 2 percent to 3 percent."

Tips for Maintaining Your A/C System

An air conditioner's filters, coils, and fins require regular maintenance for the unit to function effectively and efficiently throughout its years of service. Neglecting necessary maintenance ensures a steady decline in air conditioning performance while energy use steadily increases. Check out our Energy Saver 101 Infographic: Home Cooling for more ways to help improve your comfort and the efficiency of your air conditioner.

AIR CONDITIONER FILTERS

The most important maintenance task that will ensure the efficiency of your air conditioner is to routinely replace or clean its filters. Clogged, dirty filters block normal airflow and reduce a system's efficiency significantly. With normal airflow obstructed, air that bypasses the filter may carry dirt directly into the evaporator coil and impair the coil's heat-absorbing capacity. Replacing a dirty, clogged filter with a clean one can lower your air conditioner's energy consumption by 5% to 15%.

For central air conditioners, filters are generally located somewhere along the return duct's length. Common filter locations are in walls, ceilings, furnaces, or in the air conditioner itself. Room air conditioners have a filter mounted in the grill that faces into the room.

Some types of filters are reusable; others must be replaced. They are available in a variety of types and efficiencies. Clean or replace your air conditioning system's filter or filters every month or two during the cooling season. Filters may need more frequent attention if the air conditioner is in constant use, is subjected to dusty conditions, or you have fur-bearing pets in the house.

AIR CONDITIONER COILS

The air conditioner's evaporator coil and condenser coil collect dirt over their months and years of service. A clean filter prevents the evaporator coil from soiling quickly. In time, however, the evaporator coil will still collect dirt. This dirt reduces airflow and insulates the coil, reducing its ability to absorb heat. To avoid this problem, check your evaporator coil every year and clean it as necessary.

Outdoor condenser coils can also become very dirty if the outdoor environment is dusty or if there is foliage nearby. You can easily see the condenser coil and notice if dirt is collecting on its fins.

You should minimize dirt and debris near the condenser unit. Your dryer vents, falling leaves, and lawn mower are all potential sources of dirt and debris. Cleaning the area around the coil, removing any debris, and trimming foliage back at least 2 feet (0.6 meters) allow for adequate airflow around the condenser.

COIL FINS

The aluminum fins on evaporator and condenser coils are easily bent and can block airflow through the coil. Air conditioning wholesalers sell a tool called a "fin comb" that will comb these fins back into nearly original condition.

CONDENSATE DRAINS

Occasionally pass a stiff wire through the unit's drain channels. Clogged drain channels prevent a unit from reducing humidity, and the resulting excess moisture may discolor walls or carpet.

PREPARING FOR WINTER

In the winter, either cover your room air conditioner or remove and store it. Covering the outdoor unit of a central air conditioner will protect the unit from winter weather and debris.

HIRING A PROFESSIONAL

When your air conditioner needs more than regular maintenance, hire a professional service technician. A well-trained technician will find and fix problems in your air conditioning system.

The technician should:

Check for correct amount of refrigerant

Test for refrigerant leaks using a leak detector

Capture any refrigerant that must be evacuated from the system, instead of illegally releasing it to the  atmosphere

Check for and seal duct leakage in central systems

Measure airflow through the evaporator coil

Verify the correct electric control sequence and make sure that the heating system and cooling system cannot operate simultaneously

Inspect electric terminals, clean and tighten connections, and apply a non-conductive coating if necessary

Oil motors and check belts for tightness and wear

Check the accuracy of the thermostat.