Investing in Real Estate…How the Market Continues to Change

Investing in real estate is the two-edged sword of finance.  Many people lock up their monies in it, based on the old saw that land is always valuable because they aren’t making it anymore. Raleigh Property Management can make any piece of land valuable in the blink of an eye visit their website and check it out for yourself.
While that’s true to an extent, value isn’t an intrinsic characteristic.  It’s assigned by human beings based on their needs and plans. If your planning horizon doesn’t provide enough time for a profitable venture to manifest itself on the land in question, it has no value for you.

If real estate is an option you are exploring for your portfolio, spend some time learning about the particulars of where your money will be parking before you let it happen.

Here are several points to consider before–emphasis on before!–investing in real estate.

Who Wants It (Besides You)?

There are millions of acres in the US that could be bought or used for investment, but if that’s the only thing the land is good for; it holds only speculative value and has no prospects for an actual sale and a commercial use.  The back 40 in Podunk, USA is a far less promising target than Emerald Isle North Carolina real estate, which is a scorching hot area for investment.

What is the draw for the area?  Tourism?  Industry?  Agriculture?  It doesn’t really matter what its actual value is so much as whether that value stands to go up or down.

Farmland is surprisingly strong these days.  Growth in the beef industry and a strong demand for ethanol have driven corn prices steadily higher, taking cropland values with them.  If you have a chance to invest in the Grain Belt, it might be a good move.

How Long Will They Want It?

Real estate can have flavors of the month just like any other good or service.  How’s your TCBY stock?  Frozen yogurt was a huge fad in the late 1980s and early 1990s, and yielded great investment opportunities…until the market contracted, probably when customers got tired of brain freeze.  Franchises failed, stock value plummeted, and today the frozen yogurt business is only beginning to make a comeback.

So let’s go back to corn.  Could something supplant ethanol?  If you’ve put money into fields in Illinois and Kansas, you should be watching for biofuels or alternative energy sources to pull the rug out from under corn prices, undercutting farm real estate values.

Who’s In Charge?

Finally, as with any investment tool, make sure that reputable people are involved.  The first sign of trouble is that they seek you out, instead of the other way around.  A good investment will sell itself, and it will do so through traditional means, not through a friend of a friend.  Ask former President Bill Clinton what can happen with bad real estate deals.

When it comes to investment, many people prefer something tangible like real estate.  There’s nothing wrong with that, but it doesn’t always guarantee you a raging success.  Like any other investment tool, it needs to be researched carefully, and you should always remember that if it sounds too good to be true, it is.