Thursday, January 28, 2010
LET’S TALK REAL ESTATE-PROPERTY OWNERSHIP BUILDS WEALTH
BY JAMES SARLES
PROPERTY OWNERSHIP BUILDS WEALTH
We are already 28 days into the New Year an if one of your New Year goals was to get involved in Real Estate on Grand Bahama Island and build wealth then it is time to make your move. Don’t let another year slip away and Be a Woulda Coulda Shoulda person but rather make your move now.
It is an economic historical fact that home and land ownership builds wealth in spite of fluctuating economic conditions. When there is uncertainty in the market people start questioning whether it is a good time to buy and sell real estate. We are all aware that the number of sales have dropped dramatically by our neighbours 60 miles away in Florida, and their selling prices dropped last year. As our market in Grand Bahama never had the boom mentality that Florida had, we have not seen a huge drop in home sales and over the past 5 years our prices still have seen slow but steady appreciation. Like Aesop’s fable of The Hare and The Tortoise Freeport is the Tortoise and slow and steady wins the race as you know. So if you are wondering: Is this the time to sell because the market is going to cool again or maybe it’s the wrong time to buy because you are not sure about the economy in Freeport?
If you ask yourself these questions and can’t make a decision then you are paralyzed like a deer caught in head lights. Uncertainty about economic trends can paralyze your ability to make a real estate decision.
Yet no matter what conditions exist in the marketplace, there is a fundamental rationale that makes buying a home a sensible investment. Owning property is a way to build wealth. The longer you own a home, the more wealth you can accumulate. History has proven it time and time again.
Real estate builds wealth via equity. Each time you make your monthly mortgage payment, you build up equity in your home as you pay down your debt. If you make even one or two extra mortgage payments per year, you also decrease the amount of mortgage interest you pay, potentially saving thousands of dollars over the term of the loan. At some point, the home will be worth more than what you owe on it.
Real estate builds wealth via appreciation. The return on your initial down payment investment grows at an average of 6 percent per year in our market or even more based on the desirability of the property. Nice canal lots in Fortune Bay for example have doubled in price over the last few years and continue to appreciate. The average selling price for a canal lot in Fortune Bay today is between $150,000 and $300,000, if you knew that 5 years ago I know what you would have done.
You would have made a substantial profit on that investment. But if you did nothing then you will have nothing to show for it. If you decide to stay in the home you live in and pay off the mortgage, eventually you will be able to live rent-free in a home that continues to appreciate over time. So do not Be A Woulda Coulda Shoulda person and make that first step and start exploring the possibilities of being a property owner. Start saving money today for a down payment, meet with your bank and find out about loans, and start looking at real estate web sites so you can begin to understand the market.
My advice for you today is to make one step toward your goal today even if it is writing down your goal. Then tomorrow start saving and the next day start looking at property. Do anything that creates momentum in the right direction but do something today for your future. If you want to build wealth then Property Ownership is the answer. Until next week.