Real Estate Market and Investment

Very recently, Sam purchased a 2-BDRM 825-square feet second-hand flat, about 10 years old, in California for about US$ 200,000 (California May Home Sales). The sum appears quite intimidating for a middle-class citizen. However, the deal was easy for Sam as all he had to do was sell his own smaller 2-BDRM 600 square feet flat for US$135,000 and make up for the difference with the help of mortgage loan. When he had purchased it, the price amounted to US$70,000 which he had raised with the help of mortgage loan and paid-up a couple of years ago.
Fortunately for Sam, the person who purchased his old flat was a foreigner who paid up the amount Sam was looking at without a murmur. Coincidentally, the one from whom Sam had purchased the flat he is now living in was also a foreigner who was in a hurry to sell as he was moving out of the United States.
Thus, the principles in buying and selling of properties are intact although they may have slowed down a bit due to the current recession. In Sam’s case, he saved a significant amount having purchased a second-hand flat in a premium location. A brand new flat in the same location would have cost him at least 25% more. One may have to pay the agent some commission. However, despite the commission, the overall saving is quite high when compared to purchasing a brand new flat.
Normally, when someone purchases realty, he or she has long-time plans in mind. Except for housing agents, few may opt for purchasing properties for business purposes. The normal consideration for the purchase of property is residential or business. Then the property may remain in the hands of the owner for decades unless he or she plans to sell it earlier for some reason.
Again, normally nobody thinks much about the market value of the flat because, as residents, they do not want to dispose of the flat. They need the flat for their residential or business purpose. They cannot do without the flat as it fits their lifestyle. Thus, the market value only serves as a prestige issue rather than any profit or loss in business terms.
Likewise, properties purchased for business too are not overly influenced by market trends since the purchase is based on long term requirements. If a firm desires to purchase property for commercial use, it will, by all means, go by the trends of its balance sheet rather than bemoan the market trends. Chain retailers and eateries such as MacDonald have powered their presence through prudent use of the real estate.
Real estate is a magnificent method for conserving wealth for those who have the means to purchase property and develop and decor it. So if you are very rich, investments in properties will most probably make you richer. This is because when you are rich, you will invest in doing up the property and the environments and this will naturally add to the property’s worth. Secondly, as people realize that you have purchased certain property in a certain location, they will readily buy adjacent properties pushing property prices in the process.
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For instance, if there is the news that Brad Pitt and Angelina Jolie have purchased property in some distant island in the Pacific, there will be a beeline of prospective buyers to purchase a piece of land in the same island.&nbsp. &nbsp.