Thursday, January 24, 2013

OWNING PROPERTY: A Way To Build Wealth

LET'S TALK REAL ESTATE
by James Sarles

We are already 24 days into the New Year. If one of your New Year's 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. It is all about timing, but you have to get in the game.

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 world economy has been very sluggish over the last few years, and the Freeport Real Estate Market has been stagnate. Yes, prices have dropped, but as the world economy shows signs of recovery there are buyers back in the market looking to invest in Freeport.  The buyers are ready to pay fair current market value prices, and the motivated sellers are getting offers and selling their properties.

Unfortunately only a few sellers have dropped their list prices, but the actual transactions reflect a drop in price. The drop in prices are relative to the overinflated prices of what people thought their property was worth. Over the long term, the properties have appreciated in value and most sellers who have held their property for a long time are selling for a modest profit, and there are no property taxes so it has not cost them to hold the property.
People sell for many different reasons and sometimes they need to sell and are happy to sell at real market value, not waiting for the huge profit they might get over the long term. If you can find these motivated sellers its your chance to buy and hold and build wealth.  Its a win-win because the seller wants to sell and use the cash for other things, so they are happy to sell at market value because they need to sell. The true value of property is current market value—not what they dream they could sell their property for. If you own property and really want to sell, then you have to be realistic with your list prices.

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 continues to grow based on the desirability of the property. If you knew what property would be worth now 10 years ago you would have made a substantial profit on that investment, if you bought then and held the property. 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. 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 websites so you can begin to understand the market.

My advice for you today is to make one step toward your goal, even if it is simply writing down your goal. Then tomorrow, start saving, and the next day start looking at property. Do anything that creates momentum is a step 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 ...
James Sarles, President, Coldwell Banker James Sarles Realty

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