Investing in property

Investing in real property in the current credit crunch is a difficult decision. Much of the advice and information being given out is a downright con. The real question is when to buy investment properties.

The simple fact is that house prices have not reached their lowest point yet and a decision needs to be made as to whether an investment in properties is for a quick profit by flipping the property, or as a long-term investment that will provide a return over time. In many parts of the world, valuations are more appealing for the buyer interested in long-term income, but not so much for the investor wishing to make a quick capital profit, especially in the short term.

Many people agree think real estatevalues still have a way to alter, and the direction is down. There may be a few places, especially in the US, where prices have reached bottom, but these will tend to be in markets where there is a huge amount of stock in bank owned property. Florida would be a good example with huge amounts of bank owned property.

Getting the timing correct is all important when investing in real estate because there are some markets that may never recover, and some markets that have already begun recovery. There are substantial differences between the most boom-fueled markets and those that saw slower, more sustainable growth during the credit boom. Those most likely to recover first are the ones that were least affected by the boom. Those most likely to recover last will be the ones where artificial inflation created massive increases in real estateprices over the last 10 years or so.

A great deal of effort is being put into re-igniting the housing bubble by the financial institutions aided by the central banks. The British government for example has printed several hundred billion in new money in an effort to prevent a market correction and so far had failed to achieve their goal.

The amount of foreclosure homes in the USA and around the world continue to increase in quantity, so much so that there is more stock being held by the banks than is actually on the market. Although these properties are ostensibly for sale, they do not reflect a true market price. When this inventory eventually reaches the market, prices must adjust accordingly. Downwards. Supply and demand will eventually make the correction.

Where this will end is anybody’s guess, but currently, investing in real estate is a risk, which requires careful consideration before doing so. There is substantial money to be made if the correct market is chosen, and due diligence done before investing. At the other end of the problem are those wishing to sell rental properties in an extremely down market. The value of such properties is difficult to assess with the present low sales volumes, and any median price figures need to be examined closely to determine the level of sales before making a decision.

At the other end of the problem are those wishing to raise financing in an extremely down market. The banks are just not lending and arranging investment property loans is extremely difficult without a strong track record. The value of such properties is difficult to assess with the present low sales volumes, and any median price figures need to be examined closely to determine the level of sales volumes before making a decision.