Is Real Estate the Ultimate Business in South Africa?
The Real Estate industry has turned innumerable numbers into millionaires, making it a very lucrative investment option. The fact of the matter is that no investment is risk free. Yes you will have some investment options having higher risks than others, but risk is just inevitable. So, yes, the real estate industry may be very unstable sometimes, which can force some participants out of play.
Types of real estate comprise home, vacation home, commercial property and land. All these are fairly profitable and makes good value at the end of the day. You may want to know the risks that engulf investments in general.
- Business failure – This may arise from arise from unrealistic projections about future demand conditions. In real estate for example, you may have your property going un-leased for an extended period of time, while you have to repay your creditors.
- Inflation risk – With time, money looses its value and this has become the norm, such that it seems inevitable. This change results in the loss of buying power.
- Interest rate hike – investing in a fixed rate of return market may cost you if interest rates increase. Even if you may get your money back as is, you will loose out because of inflation rates effect.
- Adjustments in exchange rate policies – If your local currency is pegged to the US dollar and you happen to invest in the US while pegged. If your government decided to allow the local currency to trade freely, your currency may hike above the US dollar and you stand to loose in case your investment plan matures.
The final, if not the most important, factor that define risk for your investment choice is its liquidity. Liquidity is the ability to sell or buy and investment quickly without substantially affecting its value. So, if you know that there could be a buyer outside waiting to pay more than your initial cost, you surely are safe. Actually, the strength of real estate is that you are almost certain that there is someone somewhere willing to buy your house.
The Answer!
Real estate is one of the best investment options and it has become a favorite to many. Unfortunately, we cannot all afford investing in real estate. As a result, so many people have lost their property to the state because they thought they can afford real estate. Real estate is thus not the ultimate.
However, there are other options that exist that can give back as much if you are lucky. These are stock financing, corporate and government bonds, mutual funds as well as internet marketing.
This post has 1 comments
July 7th, 2010
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