One often does not refer to saved interest (from not taking out a loan) as earnings (i.e. "making 6-7% guaranteed on that investment,") but I now see what you are talking about.
All of my real estate earnings have not been in the past 3-5 years (though 5 years is a long time and certainly some of my real estate earnings have been generated in the past 5 years.) In fact, Austin missed the bubble of the past 3 years (our real-estate market was a total buyer's market because of overbuilding in response to OUR last boom of 1999-early 2001) and has just, once again, begun to take off.
OK, although I said larger, it doesn't necessarily have to be larger. But about location, my point is this: There are locations in cities that almost never depreciate, even in the worst of times. People always want to move there, and there is always high demand. Spend a little bit more and buy there. That was my point. Anyone experienced in real estate investing will tell you that location, location, location is the key.
Even in the hard times of Austin's real estate market of the past few years, there were areas of the city that continued to appreciate even in the bad market. My suggestion was to spend a little extra (whether it be a larger house or not, although I did say larger in my last post) and buy there. While I am generalizing to an extent, every city tends to have areas like this. However, any real estate transaction must be in the context of the local market, so I was only offering a suggestion for consideration by the OP and her friend.
Hey no worries, all this investment talk is so confusing anyways ...
