An economic bubble is considered to be the
accelerated value growth of different types of assets, such as stocks, art,
gold or real estate properties, with a sudden and big value fall. It occurs periodically in in
most global markets, the real estate market being the most affected. Practically,
the value of properties increases so much that they reach unsustainable levels (either
in maintenance, taxes or mortgages) and the rapid decline.
The most recent real estate bubble started at
the beginning of the year 2000, when prices started to grow rapidly, and at a
high rate, until 2007 global market collapse that has been lasting until 2012. In
history, there has been an occurrence of real estate bubbles on average every
13 years that lasted through a time period of approximately 2.5 to 3 years, the
last one having an extended period of 5 years and it is still slowly
recovering.
Making new acquisitions or taking loans and
mortgage loans to rehabilitate housing facilities can be risky during housing
bubbles due to the market’s instability and recovery process. Dean Graziosi’s predictions
and adaptability have impaired individuals or companies to do a better research
on real estate opportunities during the last 2007 housing bubble. He considers the
fear of taking risks and involvement as being your own wall between you and
your opportunity, whether it is for personal of resell purposes.
One of the greatest opportunities during the
last housing bubble has been the 2009 first time homebuyer tax credit. And
estimated of more than 350,000 sales have been made through this program
ensuring a constant market flow that has determined a request to extend this
program through the next years.
Real estate investments are a great opportunity
for people who have the means to start a business in this domain, with or
without requesting loans. Property prices are low, as well as interest rates on
loans and many real estate investors have profited from this situation to invest in buying properties,
rehabilitate them at low costs and rent them during this recession, and sell
them afterwards when the market prices can create a valuable profit. There is
still another category of property owners who prefer selling at a lower price
and gain income rather than having a valuable property without rental
possibilities.
Two important things that have to be
considered in real estate investments are time and budget. It takes a large
amount of time to invest in proper administration of a real estate business.
The most time-consuming and effort-consuming are market and increasing the
value strategies. You don’t want to invest time in something that doesn’t have
a profitable outcome. Looking for high potential properties that can be
rehabilitated to produce income through renting or selling is not easy. You
must have access to faster data, announcements and market insight.
Money is also a key factor in real estate
investment. Having a sufficient amount to buy/place a down payment for a loan
and then rehabilitate that house in order to sell it at a higher price when the
market recovers is key in starting and successfully developing your real estate
business. Also, you must always keep a cash reserve, in
order to avoid investment loss. The latest recession has taught everyone the
value of cash and the risk of being real-estate rich, so keep these things in
mind when you are planning to invest in real estate!
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