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Is Real Estate a Good Investment
June 17th, 2010 | 
Author: Noted author and philosopher Mark Twain once advised “Buy land, they’re not making it anymore”. This off handed comment still carries weight over a century after Twain spoke the words. Owning land is perhaps the most basic monetary unit.
Stocks, collectibles, even money itself: none have a guarantee of holding value far into the future. Real estate, however, is timeless. As populations increase, the scarcity of unoccupied lands will greatly decrease.
Investing in land today is not just an investment in your future, but in the future of your entire family. Long after you are gone, your family could hold onto the property, using it for further investments or to live on for themselves. Despite the many great reasons to invest in real estate, there are still a number of different things to consider as you prepare to make the leap into land ownership.
The first thing to consider is what type of real estate is the best investment for your money. For instance, condos can be a great investment and even greater place to live. However, unlike home ownership, your control over the land itself is limited into the future.
Furthermore, you will need to decide at some point whether you would prefer to invest in commercial real estate, or residential. Commercial real estate can be a great investment, but you will have to be prepared to modify and redevelop the land to best suit the rapidly changing business world.
The next thing to consider is cost, or perhaps more exactly, timing. As the economy grows and shrinks so to do real estate prices. The best time to invest might be when the economy is at its weakest, as prices tend to be lower and you can get more value for your dollar.
However, you may have to wait a significant amount of time for the economy to recover in order to recoup your investment. If you plan on living in the property that you invest in, timing may not be as big of a factor. So long as you can make payments and keep the property in good shape, you have all of the time in the world to wait out a shaky economy.
As you consider these factors, your next step should be to consult a trained local expert. They will be able to go over your existing assets and determine a reasonable price range for your investment.
Once a price is set, they will show you a number of different properties that, in their expert opinion, may have a high resale value in the future, depending upon how long you want to keep the property. When it comes time for you to finally invest, look to land for the safest bet!
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Real Estate Property Investment Series
Despite its five thousand year history, US allied Bahrain is an ‘emerging’ nation and has been in a significant state of transition since the current king and former amir of Bahrain Sheikh Hamad bin Isa Al Khalifa came to power in 1999 and it’s critical that any investor examining the property market prospects in Bahrain for profit potential in 2007 and beyond understands the nature of the development of the country before they consider committing to it.
While the current period of transition now means that Bahrain has become one of the most prosperous and attractive nations in the Gulf region in which to live, work, invest and prosper, it’s rapidly expanding economy and significant political changes have created an underlying feeling of destabilisation among certain factions of the local population.
While generally speaking Bahrain’s property market prospects for 2007 are very positive indeed and this article covers the positive prospects for the market, it also details the underlying problems that could undermine the short term attractiveness of the country’s real estate sector so that investors can make as informed a decision as possible about market entry and investment commitment.
Since the current king of Bahrain came to power his nation has made incredible progress…on the political front Bahrain is now allied with the likes of the USA and UK, it has a free trade agreement in place with America, it has open elections and in 2006 the first ever female parliamentarian in any Arab Gulf country was elected into office in Bahrain. On the economic front the king of Bahrain has been key to the transition of his nation away from its economic dependence on oil and going forward into 2007 and beyond, Bahrain has a strong economy with very positive annual GDP growth rates.
All of these factors have indirectly started a property market revolution which is largely fuelled by international citizens moving in greater numbers to Bahrain to live and work. The reason for this is that Bahrain is located in an important strategic position in the Gulf and has taken it upon itself to be the nation offering least resistance to multinational businesses requiring a physical presence in the region. As a result of attractive legislation, transparent business practices and a low/no tax policy, Bahrain has succeeded in attracting large numbers of international and multinational corporations to its shores who each require a base in the Gulf region and who each recruit large numbers of international expatriates who are now moving to live in Bahrain.
This resultant strong inward migration of professional expatriates demanding housing saw Bahrain being one of the first of the Gulf nations to grant freehold real estate ownership rights to foreigners. This has meant that now international citizens and investors are buying up swathes of real estate as it comes to the market and forcing up property prices out of reach of the local population. In addition to this situation, supply of property especially in the main commercial areas is in limited supply which has also resulted in a frenzied rental market too which further excludes many local citizens – clearly all of this activity has created a feeling of frustration among local Bahraini citizens and it is this frustration that is causing an undercurrent of disaffection.
There is another factor affecting the housing market in Bahrain as well – as Bahrain is joined by a 25 km causeway to neighbouring Saudi Arabia and yet is a far more liberalised and tolerant country, Westerners working in Saudi are also choosing to live in Bahrain and to commute across the King Fahd Causeway rather than live directly in Saudi Arabia. On the one hand all of these factors mean that there is strong and increasing demand for commercial and residential property for sale and rent in Bahrain among an increasingly affluent international community – this means that in 2007 and beyond there will be a perfect environment in Bahrain for property investors to exploit.
On the other hand however there is mounting tension among those local people who cannot continue to afford the rising real estate prices. While this tension goes largely ignored some are starting to say that Bahrain has moved too fast in developing new areas of its economy and in allowing multinational companies to set up operations in the country. These multinationals have been accused of largely employing expatriate staff in a country where, especially among the Bahraini youth, there are significant unemployment issues and also minimum wage issues.
So, while international demand for property in Bahrain is strong and increasing and unlikely to subside in 2007 which means investors have a hot market to target, increasing land and construction costs and a growing division between local affordability and real estate prices is creating a very real environment of disquiet that should not go overlooked by an investor determining whether the risks of market entry outweigh the prospects for property market profit.
Real Estate Taxes Vs Personal Property Taxes
Lots of people, like you, are living in confusion. Uncertainty clouds their minds and keeps them from “seeing” the truth as it really is. Take for example, distinguishing real estate taxes from personal property taxes. There are some individuals that don’t know the difference between the two. One reason behind that can be traced back to our teachers during the good old schooling days. That is completely understandable, because the way they explain the subject matter is so damn boring! When they finally hammer the information needed into the back of our heads, it’s quickly forgotten – who would want to remember a boring part of their life anyway? SO without further delay, I’ll be discussing the difference between the two in the simplest terms possible.
First and foremost, real estate taxes are slapped on to real property. Real estate is immovable prop, like land and all the infrastructure or improvements on it. For deeper understanding of what the immovable is, check out the following examples: a house is considered to be attached to the land permanently, which cannot be moved whatsoever, so it belongs to this particular category. Other examples include buildings, ranches, farmhouses, and other infrastructure attached to these are classified under real property, which means they’ll be charged real estate taxes. Moving forward, personal prop includes your movable assets, almost everything not belonging to real property.
An example of this would be your car, the animals or livestock you own, your furniture, and even your money. They aren’t permanently attached to the ground on which they stand, which makes them more than qualified to be grouped as personal prop. Getting back to the topic on tax, personal property taxes are assessed on property that’s used in business only, my friend. The local assessor in your area has the responsibility of providing you with a form, in which you’ll be given the obligation of filing it up. With it, you’ll be required to state the value of your property.
Real Estate – Private Property Rights
A call to action… Now is the time to act and for you to join the fight to protect and to keep private property rights that you use and enjoy. Well meaning individuals are campaigning to remove many of these fundamental rights that most Americans take for granted.
Every property enjoys a “bundle of rights”. Real estate agents and brokers work to market and transfer both the property and the property’s “bundle of rights”. These are the rights people have in real estate they own – also called “private property rights”.
There are two primary philosophies in America today regarding land ownership and real estate ownership. The first philosophy calls for and advocates the government owning the maximum amount of real estate, including land. People in this camp do not trust home owner’s and private property owners to manage their real estate responsibly. The opposing group, those who support people owning their own home or own land, see the rights people hold in private property as the core to living in a free society.
Well meaning socialists have advocated the public’s ownership of everything from your home, to land, means of production, capital, credit, to health care. This has been true since the start of recorded history. Socialism attempts throughout the history of the World, including those happening today, have all had the same result; failure. Evidence of this is seen in history books and in places like Cuba.
The United States was founded on the principal of every American having the opportunity and benefit of owning real estate and private property rights. “It’s all on your shoulders to push yourself as hard as you can. And that dictates how successful you will be,” according to The Code of the West; Alive and Well on Wyoming Trailer. It is essential for capitalism to flourish that you have the right to manage, control, and own your own home, farm, ranch, land, and your own business. The quality and standard of living we enjoy today, we owe mostly to our ability to own our own homes, our own real estate and our own land.
If you no longer had the right to own your own home, to own your own lot or your own land, what would America look like?
Private property rights are being attacked now more than ever by agencies of the federal government and by laws with deceptive labels. The Conservation and Reinvestment Act, for example, if passed allows the removal of private property rights; placing these instead with federal bureaucrats. The Grizzly Bear Overlay (GBO), if approved, may affect large amounts of land. Swaths of real estate in Idaho and elsewhere if approved, could suddenly become subject to the strict rules of the GBO. The GBO would restrict what people can do with real estate. If your rights in your real estate were lost as a result of an overlay – but not lost to property across the street from you, how would that effect demand and the value of your property? The Environmental Protection Act has a pretty name but in reality, the act transfers the management decisions you have in your home or property over to the the federal government. There are many laws and acts that have the same effect, such as, wet lands laws, endangered species acts, national monuments being proclaimed, and others that have consequences and limit the the rights an owner or renter has in their home and land.
Make Money in Real Estate
You need to be able to identify all of these aspects could be influencing your profit. You will find four major parts of creating funds in real estate: cash flow, appreciation, loan reduction and tax advantages. You should realize how do the four aspects work together to produce a rate of return.
Residential investment property isn’t merely making you a nice gain when it appreciates. And it isn’t necessarily loosing funds when it depreciates.
Know the economics inside your area.
You might have to look beyond the basic growth with the location you’re investing in to the overall health of the city, state and country. For example, if interest rates are rising, you need to realize that borrowers are getting restricted from the industry.
The half a dozen components of economics you are required to recognize are: mortgage interest rates, affordability indices, supply and demand, demographic information, commercial property and the job market.
Many potential investors take classes in both macro and micro economics. Macro will help the investor understand the big forces that impact this industry, for instance recessions, national interest rates, war and demographics. Micro will appear at individual sectors and focus on the local market, for example local disasters, nearby recessions, unemployment rates, supply and demand, new housing starts, housing for sale and kinds of vacancies.
There is a great deal that you should know prior to you jump into being trying to make money in this industry. Yes, if you’re just getting and fixing up and selling one house, you’ve the potential to make funds. But if you expect to do this as an investment, you should obtain the required education. Otherwise, you’re gambling with your money.