3 Tips to Determining a Good Time to Invest In Real Estate
Investing in real estate is definitely the smartest decision that you can ever make. This is because your property will never loose it’s value. In fact, the value of a property only continues to rise as time moves. And maybe that’s why some investors buy and hold. The other advantage is that you can always use the asset to secure a loan from a financial institution.
However, all these benefits can only be experienced when your investment is well timed. When you invest at the wrong time, you may not reap fat gains as expected. This is because the odds will work against you. At the end of the day, you run into losses after putting up houses that no one is willing to occupy as a tenant or owner. The tips outlined below can help you in determining the right time to venture into real estate.
- Political Stability
Most people will tell you that you only need to have enough money to succeed in real estate. Of course you need money, but it’s not everything. Politics influence real estate sector by a great deal. When a country is at war with itself, there is bound to be massive destruction of property. For instance, even if you owned all the money in the world, would you dare to put up rental apartments or residential homes in Syria or Iraq? Unless you are not updated on current affairs, your answer should be a big No.
This is because the political instability doesn’t create a conducive environment for the real estate sector to thrive. If you put up rentals in a country where civil unrest is the order of the day, you would not get any serious buyers because everyone is on the run. If you are really interested in investing in a foreign country, it’s recommended that you first do a due diligence on the country’s political status to avoid wasting your money and time.
- Healthy Economy
Those who invest when the economy is still in good shape reap the most gains. This is because they are able to secure low interest loans from banks due to low rate of inflation and sell their properties at higher prices.. And that’s not all. When the economy of your country is strong, you spend less money when importing building materials from other countries. Picture this, if the US dollar weakened today against major currencies, investors would have to spend more money when importing stuff from foreign countries. On the other hand, if banks and all lenders in general hiked their lending rates, there would be less people borrowing money to invest in mortgages. When such news is released, you must wait until the situation changes. During the great recession of 2008, the prices of houses fell with a thud. Banks that had issued loans against homes incurred huge losses because
- High Demand for Housing
The high demand for housing creates an opportunity to invest in real estate. Such an opportunity is triggered by increase in population and availability of land in prime areas. When population increases, people migrate into urban centers, resulting in shortage of accommodation. In addition to that, a reduction in levels of unemployment is a reliable indicator that people will invest into homes. When more people are into gainful employment, they will definitely want to secure their future by buying houses through mortgages. But when there are few people in employment, properties will remain listed for a long time because majority of the masses can’t afford to pay for a home. For more insights on investing in real estate, just visit americanrealpm.com.