Sunday, August 23, 2009

Why Invest in Real Estate?

This is a good question, especially in the current climate with many people losing their shirts as well as their homes in this most recent recession. But when you look at those who have lost their homes you find that many of these people have bought way above what they could truly afford, bought poorly, been advised badly, have not taken appropriate steps like mortgage insurance to insulate themselves or a combination of all of these.
Their situation has been further hampered by the banks and other lending institutions. Once upon a time these organisations would screen every application thoroughly and if there was any problem you got turned down. With the pursuit of the big profits for the big bonuses, these safety checks became very relaxed, and hence this became a major cause for the crash we have had.
So after going through all of this why would I say that investing in real estate is still a good thing. Easy really, just look at the history of property. After every fall comes a rise, and with every fall and rise comes opportunities. And unlike the share market, property is real, not something on paper. When a share market business crashes your bits of paper are worthless. When the property market crashes you still have a house which you can rent out or sell if you are really desperate.
Give me the property market anytime for its long-term prospects and safety. Happy investing.


Thursday, August 06, 2009

Real Estate Investing and the Recession

Do the rules change for property investing when there's a recession on? Yes and no. No because if you have a solid foundation of rules then they are going to serve you well no matter what the situation. For example if you have decided that you will not purchase a house unless it is returning at least 10% on its purchase price then that's a pretty good rule no matter what the state of the economy. Yes because you might want to change this rule so that you will only purchase a property investment if it is returning a minimum of 12% on its purchase price.
During a recession you can probably get these sort of returns and even better if you really go hard.
However whether you want to tweak your rules during a recession and the consequential housing downturn or not, there is one indisputable fact about a recession. If you have funds available for property investing then you are in a great position to purchase the bargains that inevitably hit the property market. And if you're really keen you can by-pass the real estate agents and advertise for houses yourself. It's amazing how many desperate people who are out there that want to deal with you rather than a real estate agent. They see you as a savior and someone who is going to save them money. As long as you stick to your rules and make it a win-win deal you will be laughing. All the best in your property investing.