updated 4th October 2016
The rise in the real estate market
today is most likely to be attributed to the presence of some individuals generally called “property investment gurus”. This set of individuals invest most of their time in instructing real estate investors on how they can make millions of dollars from residential property investment. Most experienced investors are skeptical about anybody who is eager to tell how he made money and how you can do the same. Now the question is; if the so called investment guru has truly found a workable and easy way of making money, would he want to share that with a lot of his own investment competitors and prospects? There must be something in it for me.
The only reason for the action of these so called investment gurus is that they are trying hard to sell ideas to landlord and in the long run enrich themselves. If you check well, most of these property investment guru’s were traditional in residential property for which they were meant to receive a certain commission either from the property owner or the development company. Most of them are recently trying to water down investment properties to UK investors gotten from the US.
These so called gurus sell the attraction or benefits of these investment properties to most landlords as properties and portray the properties as being:
- An incredibly low in price.
- The highest double figures potential rental yield.
- A potential increase in the capital values in the event of improvement of the area.
UK & US property ‘chalk & cheese’
These real estate investment opportunities might seem so good and inviting. But if you know anything concerning the United States and the United Kingdom systems, will know they have an entirely different residential investment property markets and planning systems. Most people might be of the opinion that the UK property market has one thing working for it. According to the famous advice of Mark Twain “Buy land they are not making it anymore”. It is obvious that the UK was on his mind when he made that comment. Every UK resident and landlord is not oblivious of the fact that there is a restriction on land supply in the UK. This fact is mostly true about development land which is highly constrained by a planning system and the green belt. This implies that development lands and the property therein might be on the high side. As demand on accommodation from renters, owners and investor becomes so high because of high rate of migration, these development lands becomes increasingly expensive.
Unlike the UK, land market and planning system in the US is entirely different. There is excessive supply of land without a green belt and are also non-restrictive. The US system is based on zoning and it releases a large chunk of development land on towns and city fringes. This makes land in the United States very cheap. This also has a down undertone on the US because the inner cities will suffer from dereliction more than the UK. Properties in these derelict cities will be extremely cheap but with delayed urban regeneration.
Property Guru warning
You have to stop and have a re-think if you want to take the advice of these guru’s. Find out what is their motivation. Do not hold your breath because of their fanciful cars, their confidence, their swagger and their promises and painted images of a better and wealthy future.
The responsibilities of property investor:
- To conduct researches on the internet to get information on these gurus proposition and what they are up to and most importantly their background.
- To find out why the investors that are closer to the proposition are not catching in on the investment opportunity.
- The property investor should be able to ask the pertinent question; if truly these residential properties are such an attraction, why are they not buying them up by themselves? Of course their answer will be of a clear intention of not being greedy and of having enough money already.
After a thorough research by the property investor or the landlord, you might find out that the property investment proposition of the so called property investment guru is not as attractive as they make it seem.
Jacob Pettit is a real estate blogger dealing mostly with property investments and ways to maximise their potential. Currently he is interested in Removals Sydney market and the effects it has on the property values.