The difference between a good investor and an ordinary one is the ability to see things through. Since 2006 when the housing crisis first emerged, there have been real estate investors who have continued to make investments and earn decent returns on their investments. The only hindrance during the difficult times was the tight credit market which made borrowing in real estate a big problem. The fact remains that any time there is a foreclosure, there is someone who will make some money from selling the property.
Though the property prices were depressed for a long time, there were property sales still being transacted. A good investor is bound to benefit immensely from any investments made during the depressed price periods. According to S&P/Case Shiller home Index, just in America the housing sector is on a recovery path with 20 major cities recording a rise in prices from January this year. The real estate sector in the UK is also experiencing an upward curve. Investing in real estate has always been and will continue to be profitable as long as an investor takes a few factors in consideration.
Some of the fundamentals to keep in mind include;
Location – Regardless of the state of the economy, a property in a prime location will always command a premium price. A proper analysis of the location will also consider the demographics and transportation as well as the future development prospects in the area which is vital in making an informed decision. Once an investor is satisfied with the research and the specific property details, it is a good idea to proceed without delay.
Property type – Different property types require different ways of handling. Commercial properties may be easy to let but slightly difficult to sell. The investment strategy of the investor will determine the type of property to invest in.
Financing options – While the housing market has shown signs of a strong recovery, financiers as usual are slow in capitalizing on the trends. Choosing a financier who has confidence in an investors strategy is the first step in securing financing for profitable property deals.
Exit plan – Like all investments, an investor should have an exit plan in case you need to liquidate your investments at a short notice. Investing in properties that sell over a short period such as apartments is a strategy that can keep an investors money within reach if they need it for other investments.
Investors who may want to hold back on investing in real estate during a period of uncertainty need to remember a few advantages of property investments. Real estate in the long run always has capital gains. Properties continue to generate rental cash flow after the investor makes the initial outlay of capital. The purchase of a property requires a small initial deposit for the equivalent of a large capital value of the property. An investor can then make a profit selling or arranging a way to clear the balance having made the initial commitment. Property investments are generally not affected by inflation. In case the financiers increase their mortgage rates, property owners have the option of increasing the rent of their tenants.
To the question of whether it is feasible in investing in real estate during these economic times? Then the answer is that this is the right time to make investments as the depressed prices will rise during the coming months.
Abbas Hussain is a blogger who researches and talks about real estate and the commercial property sector for Cable Properties and is a regular guest blogger for Khusan.com.
This article reflects the personal opinion and expertise of the mentioned author and not that of Khusan.com