PhotoThe investment landscape continues to be a scary place. So, if you have some money to invest, where should you put it?

The stock market rose sharply in late 2011 and could go even higher this year. On the other hand, it could be one big sovereign debt default away from a substantial decline.

How about gold? You can't argue with its rapid appreciation over the last few years, but how much more upside does it have? Billionaire investor George Soros has called gold “the ultimate bubble.”

Discouraged yet? Maybe you want to just sock your money away in a bank certificate of deposit (CD). But financial experts at the University of Alabama at Birmingham (UAB) say interest rates are so low that buying a $1,000 two-month CD from the bank will only earn you 83 cents more than if you buried the same amount in your yard for two months.

Real estate?

So, what does Andreas Rauterkus, assistant professor of finance with the UAB School of Business, think you should do with your money. Believe it or not, he says buy a house. That's right, invest in real estate.

“First-time home-buyer rates are around 3.8 percent for a 30-year mortgage, so if you can afford a $1,000 mortgage payment monthly for 30 years then you can buy a $250,000 home right now,” said Rauterkus. “It won’t get you much in New York City, but you can get quite a house for that in Birmingham and other affordable areas across the country.”

That's true, home values have fallen each of the last three years – some markets by more than 50 percent. Prices in some areas are now back to their levels before the housing bubble began to inflate.

You have to do your homework

The biggest mistake people make is not doing their homework, says Lary Cowart, Ph.D., assistant professor of real estate and finance at the UAB School of Business. A certified real estate appraiser, he says the primary change in real estate during recent years is price, which has gone down.

Cowart says people will research the obvious factors — school systems, convenience and neighborhood — but ignore details about the property and the transaction that lead to big problems.

“Not enough people take time to study things that will affect the transaction and rely on others to do the homework for them,” said Cowart. “Even smart people can buy a house and not realize it needs work. So suddenly they need $12,000 for a new roof, but they’ve spent all their money buying the house.”

Ask the right questions

Buyers, especially inexperienced ones, should be prepared to ask the right questions of the owner and every service provider, and to exercise their right to inspect the property thoroughly, he says.

If you qualify for a home loan, Cowart advises against waiting for the house of your dreams to drop in price; once the housing prices hit bottom, interest rates rise. And each time the interest rates rise, you lose money.

“Holding out to try and find the lowest price is not a good strategy because if the house were to go down 10 percent but the interest rate goes up 1 percent you are not gaining anything,” said Cowart. “If rates go up 1 percent, say from 4 to 5 percent, that is a 25 percent increase in the interest rate; so the mortgage payment goes up by more than 10 percent and the amount of house that can be purchased goes down by more than 10 percent. People fail to realize that and it is another little thing that will cost them big over the 30-year life of the loan.”

All of this, of course, relies on you being able to come up with a 20 percent down payment and otherwise qualify for a mortgage. But for those who can qualify, Rauterkus and Cowart says a house may be the best place to put your money in 2012.

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