Investment in Real Estate – A Sure Thing

From ages ago, humans have always had the need to acquire personal property. Pre-historic man may have desired to have undisclosed caves so that they could hide away from their other counterparts.

In today’s world, the non polluted beach front real estate like in California or any other part is what everyone admires to own. Unlike many other forms of investments, real-estate has been a kind that never gets out of fashion throughout history. As usual, there are setbacks in every form of investment and real estate is not one to be left out. However, judging from history, investments in gold and the real-estate markets have withstood the challenges of time and have proved to be reliable and secure.

One major form of real estate investment is done by property development firms. These companies usually buy property and carry out development, creating prime real estate that is later sold for a profit. There are two major forms of real estate investment and the first one is by large companies who invest in land using their surplus profits or keep the funds away in a secure location. Usually, this is done by investing in commercial property.

Residential property, when bought in the form of single plots of land or structures is usually purchased by individuals. This is done to both, provide a home for a family as well as a form of investment. While, till a generation or two ago, a family bought property to make a permanent home for themselves, this situation has undergone a considerable change over the last few years.

In the 1950s and the early 1960s most Baby Boomers purchased housing units in suburbs that were surrounded by white picket fences. This was referred to as the American Dream. They had the intention of bringing up their young children and living in these houses permanently.

Most modern families these days buy property in real estate in short or medium terms. The main aim is still on getting a home to live with the family, though it may be used for a few years before moving to other places. Modern lifestyles do not allow for the settling down of a family in one place for longer periods. With these trends, it is very often for teenagers to have been in 3 to 4 schools in different cities. This was something quite uncommon in the past and was associated only with military personnel children.

This being the case, why is buying property still such a popular option? Why not just rent and then move on? There are two reasons for this. Firstly, there is no longer any guarantee of how long a family will remain in a specific location. Economic uncertainties, large scale churning in the job market and sudden opportunities for growth make it difficult to predict the duration of a stay. Signing a lease when a family does not know how long it will be living in a particular place is a problem. And all the money spent on rent over that period is gone for good.

The main underlying factor is that property is a viable investment no matter what. If a house is bought and lived in for several years, there is still a great likelihood that the property could be re-sold and a profit gained. The amount accrued from the sale of a property will eventually be used to easily settle in a different locality.

Of course, this is not always true, as the present collapse of the housing market has shown. But once again, a one or two year slump is nothing much in a generation. The chances of appreciation are much greater than that of loss. That is why family with a little extra time on their side often goes in for off plan / pre-construction real estate since the discounts available make the investment lower and thus the profit margin, when selling the property, higher.

Investing in real estate is much more different from other form of investing such as investing in the stocks or gold. Property provides the family with a real and comfortable dwelling place, while stock certificates or gold do not. This is the reason behind the huge stability in the real estate markets and will always remain to be the preferred choice for quite a long time.