Why Properties Can Be The last thing Some People Invest In

By on September 28, 2013

There are several valid arguments as to why properties should be the last thing you put your money into. Do you know the reasons why folks don’t want to invest money in real estate? Many are afraid due to property investing being a new thing to them, so we have to understand their fears and find out what their reservations are. There is the possibility that some have actually tried it and got their fingers burnt. They made the wrong choices and missed the golden boat. Property is the most expensive thing to buy for some people in a lifetime and if you’re wrong, all your savings are lost and could take forever to recover from the financial setback. Also, due to the high cost, it is hard to create buffers if anything goes awry with the investment. If you have property and need to get rid of it quickly, you may not be able to do so, because the market may not be where you require it to be when attempting a panic sell.

If you invest in the real estate market, be it a landed house or others, you need a lot info about the particular asset, to take a final decision. But this type of precise data is difficult to come by and a lot of confusion prevails. A new investor could be lost on where exactly to obtain the required credible information to make an investment decision. Hence you cannot bring the matter to a decision maker without relevant statistics. Even when prices are on the cheaper side, you’ll still need to know why it’s so. Because things could be going downhill once you make the purchase. If say, it is a house but was damaged by the previous occupants, it will need thousands to repair and get it in shape, at par with what it was. It has to be at a standard comparable to other homes, say, in the immediate area. After all this effort and expenditure, with market conditions the way they are, what if you cannot sell it at a profit? What if you can’t even recover your cost? So there’s that risk you take beloved. You may have to wait awhile for the prices to go up, for it to have been a worthy investment. Also there have been foreclosures, not only in the area you are looking at, but all over town. In this case, your property may not be termed profitable because at the present rate, it looks like the market will only improve after three to five years. All those dollars put on hold.

bad experience with propertiesSome people invest with high hopes but are forced to sell with bitter tastes in their mouths. It is extremely disappointing and there are several horror stories flying around about this. People have described how horrible the experience was all over internet forums and how valuable money that took years to accumulate was lost.  Anyone listening in to these tales will come to the conclusion that to invest in property would be an extremely foolish move. It would be unwise at the present time to buy property. Of course, this all points to a lack of knowledge and so investing in property is certainly a high risk.  But these stories bring us back to what was stated earlier. There exists a lack of credible information and other factors that prevents investment in property. In the face of these adversities, people simply avoid real estate altogether. Investing in the stock market is much more easier. All that is needed is a click of the mouse. And exiting the investment is so much simpler as well.

It can be a lonely journey

Nowadays, property investors can sometimes travel a lonesome road. They could be sitting on prime land, but these don’t go up in value due to a depressed market. Neither are they able to sell as there are no takers, at least for the price they’re asking. So the only option is to sell off at a loss bite into negative cash flow, something extremely hard to do. Property investment isn’t for just anybody, and those folks who’ve done it cab be a lonely lot. Undoubtedly, it must have seemed a good means for them to build up wealth via real estate. Did you consider, after investing, that if prices went low, you couldn’t sell even if you wanted to? If so, the assessment of the risk factor before buying was not thoroughly done.

People didn’t consider certain factors, didn’t understand things could take a turn for the worse. If that happened, would they be able to fix the problem, would they understand how to cut losses? Certainly it would be hard selling off in the recent scenario of a falling market in many places all over the world. Will you be now willing to take a big loss, to sleep soundly and not worry you’ll lose more?

Folks should know if guaranteed a certain rent for a certain period of time, that amount would have to be added on to the purchase price? Unless you purchase a bunch of property from around your country, long-term data showing expected returns would be of little value because of several unforeseen items. There are factors that control prices, like increasing building costs, people’s unwillingness to sell land for development, developer’s fees and shortages in housing stock.

Property investment isn’t good for older people, staying in mortgage-free homes, living on superannuation money and having $50,000 for an emergency. It’s not feasible for them to repair the house to boost income or pass on to close relatives. Younger folks can take care of themselves. People should put money in things other than property, which is now tied up due to frozen markets. They should be wise and diversify, after clearly understanding the risks. Greed should not drive us in investing in things not favorable.

Economists warn of home prices going bad, falling markets, and graphs and data that are useless. Banks won’t entertain bad debt, so this affects clients. The warnings make sense if this is information others only guess. Bank sometimes won’t loan money if you show property papers but insist on income returns. Try your bank for cash to invest in shares and see the reception you’ll get! People have invested, buying property thinking it was low risk, the downside is not exactly tragic, and with a huge upside. That may have been the case, but it isn’t so rosy now. That’s where property investors feel the pinch and are a lonely lot. Why wouldn’t they be? One minute markets go up, the next minute, it plummets down. Property investors had hoped to cash on to a property boom but it can also really turned out badly.



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