Finance

Are the Wealthy Still Investing in Real Estate?

By: Joseph Akintaju on April 30, 2013 @ 12:43 pm.

According to some news reports, the U.S. housing market is slowly pulling out of a several year slump. Prices bottomed out and some sellers had to practically give away their homes to make a sale.

Commercial real estate sales, meanwhile, have been struggling as well. According to the New York Times, investments in buildings back in 2005 and 2006 did not pan out as expected; leaving owners hard-pressed to make mortgage payments on buildings that were not producing.

In spite of this, U.S. commercial real estate prices were up by 28 percent in May, 2012, from the low in January, 2010 (according to Moody’s/Real Capital Analytics National All-Property Index), and all signs show that shrewd buyers are still picking up prime property with a promise for a better future.business growth

Big Investing Business

Lehman Brothers Holdings Inc., participants in the largest bankruptcy in U.S. history, is pulling itself out of its dire straits by doing what put it in trouble in the first place: investing in real estate.

However, their smarter investment strategies seem to be putting them on course to be able to make payments to creditors and start making a profit. On a much smaller scale, wealthy investors around the U.S. are still following the age-old practice of putting dollars into tangible real estate with an eye to the future.

Financial Advice

While wealthy investors may hesitate to sink their dollars into a piece of real estate that may not bring high return on the dollar, The New York Times reports that many financial advisors are pointing out valuable investments to their clients.

A key to success in such investments is ensuring “bad” is planned into the investment strategy: if the worst case scenario happens, will the investment still pay out? For many the answer to that question is yes, when the deals are planned carefully and research is thorough.

waterfront propertyValuable Gems

Some of the best finds on the market are gems that are being sold at a cheap price due to the soft market or poor planning on the part of previous owners. One such example was the recent sale of Smith Mountain Dock and Lodge in Virginia.

A local landmark and a prize piece of real estate, the property includes a marina, dry dock spaces, and some tracts of land which have houses and rental cabins.

This type of real estate, with a track record of success and history in the area, is an example of the type of investment many wealthy investors are finding inviting in the midst of troubled times. If an investor can purchase that type of property at a cheaper price in a sluggish economy, hold on to it until recovery, then he can start to see return on his investment.

Investment Strategies

There are as many investment strategies as there are financial advisors, and knowing where to put money down can be a problem. The fact that new construction is down is actually a plus for investors, because existing properties retain more value.

Real estate investment trusts (REITs) are popular these days, and range from hotels to health care facilities and apartments. While real estate investment will always be risky, there are some excellent opportunities waiting for the right investor to discover.

Paul Moore works with Smith Mountain Homes near Smith Mountain Lake, VA.  For ideal investment properties, see the offerings at their site of quality, upscale homes.

Further Reading

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