Take the Leap into Real Estate Now
Fear, Hesitation about Getting into Investing Mean Loss of Profits
Jan 4, 2009
There is much media noise about the “bad” real estate market and the plunging value of properties. It is enough to scare off the faint-hearted who ever toyed with the idea of beginning their own real estate empires, however small. The truth is that, to successfully plunge into the real estate investment waters, individuals must drown out all that noise and keep themselves afloat with good investment fundamentals and common sense.
Uselessness of National Real Estate Trends
Reports in the media about what is happening in real estate nearly always hype so-called national trends. “National trends” in the purchase and sale of real estate may serve as small talk at parties, but they are meaningless for the well-informed, serious investor. Among other things, the various organizations that report on national trends do not use the same metrics for assembling data, and the reported trends may have occurred months ago and not present an up-to-date picture.
More importantly, real estate, like politics, is local. Real estate comes in many forms; farmland, single-family homes in the suburbs, apartment buildings in cities, retail space in shopping centers are but a few of the forms, and they can hardly be equated with one another. Gallup, New Mexico and Providence, Rhode Island have inherent differences in topography, economy, governmental policies, employment opportunities, and demographics.
Moreover, within Gallup, as within Providence, neighborhoods differ vastly from each other. Properties in a neglected concrete-jungle neighborhood may be on the market for months, even years, while properties on tree-lined streets with lake views in another neighborhood of the same municipality may sell within days of a “For Sale” sign appearing out front. The maxim “location, location, location” exists for valid reasons.
Real estate investors need to familiarize themselves with the composition and characteristics of the local areas in which they are considering investing. The desirability of a neighborhood, the quality of the schools, the accessibility to highways or public transportation are some of the factors that affect the value of real estate in a particular area.
Good Properties for Less: Great Return on Investment
While it can be disheartening to buy a property only to see its value decline, it is extremely difficult to accurately time any market, including real estate. If prices have already dropped substantially in a given area, sitting on the sidelines in hopes of additional price drops means that rare opportunities to buy at acceptable prices – as defined by, among other things, an individual’s real estate investment plan – are being squandered.
Even if investors see area prices drop after they have bought property, they should not lose sight of the big picture:
- the purchased property can be put to work (i.e., rented) and earning money for the investor
- real estate values appreciate over time
- good deals (more space and features for fewer dollars) are easier to find when real estate sales are slow than when markets start to take off
- buyers in slow markets have more clout to obtain concessions in price, upgrades, and repairs from sellers
Wealth Creation: No Time Like the Present
The bottom line? For individuals who have thought about investing in real estate to increase their wealth, who have familiarized themselves with the proper way to go about investing, and who can handle the burdens and responsibilities involved, the current real estate climate represents a rare opportunity to pick up good properties for their portfolios.
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