Property investment seems like a good opportunity for increasing cash flow, but how can you be certain you will reap the rewards of your risk? As clearly evidenced over the last six years, the market is extremely volatile and there are no guarantees what will happen next.
Just a few months ago, investment guru Warren Buffett said that while the market in the United States is picking up, there are still possible problems in the foreseeable future. However, it’s a matter of determining how to use these issues to your benefit. It’s the notion of standing firm on shaky ground.
This is a lesson many investors could benefit to learn, given that housing markets can fluctuate at the tip of a hat. Of course, feeling a bit of security in your property investment could certainly lift a weight off your shoulders too.
According to the Library of Economics and Liberty, private property rights in America dictate that an owner has three main entitlements: first, they have the option of how the property will be used. They also own the right to the services for the resource, meaning they can live in the house or tenant it, as they so decide. Finally they have the option of exchanging the property, however they would like, on mutually agreeable terms.
Now this is a capitalistic idea that applies not only to America but various countries around the world as well. So what makes the United States stand out above the rest? For one, late last year The National Association of U.S. Realtors reported that 20% of home sales were to individuals classified as investors. Consider why that might be. If there were no improvements in the market why would individuals take that chance now? Why would Warren Buffett, as addressed in our previous article, be starting a Home Investment Company?
Following that, at the start of December, a former Morgan and Stanley Housing Analyst commented in The Economist that residential prices don’t even need to go up for trade to be profitable. Buyers simply need to select their properties carefully and carry out necessary work, as required. “Buying houses themselves may be the smartest bet of all. Having been too lax in granting mortgages before 2008, banks are now erring on the side of caution. But people still need a place to live which pushes them to rent instead of buying.”
It seems there is a low likelihood of the United States getting caught in another bubble any time soon. Lenders are being much more cautious, as are buyers, and therefore, there are plenty of opportunities for overseas investors to get in and start putting some security in their future. Don’t get left behind.
To find out more, contact us at Estero today.