When
you walk down that road of investing , you will never turn back. The returns
are just too good to ignore , and your 9-5 job will never churn out more money
than inflation takes away from you. Hence it is necessary to change your
outlook with a changing scenario. Saving money will get you nowhere besides pay
for your overpriced meal on the weekend or a new car that erodes value faster
than it drives you.
This
is where secure investing is essential. Real estate is the only investment that
brings you higher returns than a fixed deposit , and is secure enough to hold
its value and multiply with time.
When
building your real estate empire , the cardinal rule is simply to apply basic
business doctrine. As with any business , in real estate the objective is to
sell something for higher than it costs you to buy it and fix it up with all
additional operational and administrative costs involved. When renting your purchase
, you subsidize a fair amount of your mortgage but not the entire amount. Greed
always comes before the fall , so watch out for this as it will cloud your
judgment and hinder otherwise sound and focused decisions.
We
at Cayman have compiled a brief guide to help you understand the potential of
this market and enable you to become an active player in it’s success and
eventually your own success. If you’ve reached this far , you are serious about
investing and will be able to amass a fortune from real estate opportunities.
We are simply the instruments who can help you make informed decisions. Welcome
to the world of real estate.
9 Reasons to invest in Real estate
1.
Cash flow: To utilize the full potential of your
real estate investment it is important to make sure you cover all avenues of
wealth recovery on your investment. Rentals are a surefire way to get a 8-12 %
yield on your purchase. In this way your money starts working for you
immediately and coupled over five years , could pay for half your investment,
and finance your lifestyle putting you in a situation where you don’t really
miss your money
2.
Supply and Demand: In the simplest terms , there is always
a fixed amount of land that comprises a country. In the case of the UAE this
area is 83,600 sq km. With a further focus on Dubai , this area now becomes
4114 sq. km. This is fixed and cannot be changed . The population of Dubai is
approximately 1.6 million , and is at an exponential growth of 6% per year. Due
to this increase in population , Dubai had to begin constructing housing for
the influx in 2004. Four years later , the construction boom led to a lot of
people moving into their new homes and offices , but there are still thousands
displaced. The demand is still very real. The supply is being increased to keep
up with this demand. At the end of the equation , you as an investor have
nothing to worry about . The dynamics of supply and demand will ensure you
always have a tenant to generate a rental income on your investment.
3.
Appreciation: A constant demand coupled with an ever
increasing requirement will ensure that not only will you cover your investment
with rental income , but also that the intrinsic value of your property
appreciates in the upcoming years. A safe estimate for the appreciation of your
investment is between 10-15% per year. This is the bare minimum that you will
see one year down the line . If you invested with the sole purpose to make your
money work for you , then you would have effectively increased your wealth by a
quarter of the initial investment over the period of one year.
Eg. Principle Investment (AED 1,000,000)
Rental income (10% of investment = AED
100,000)
Appreciation (15% of principle investment
= AED 150,000)
Total wealth generation = Principle +
Rental + Appreciation
AED1,000,000 + AED100, 000 + AED150,000 =
AED 1,250,000
4.
Equity build-up: You reduce your mortgage and increase
your equity with every mortgage payment made. A portion of your payment goes
towards reducing the principal. The shorter the tenure of your loan, the faster
the equity builds. This is the principle of good debt working for you instead
of against you. The debt is not accumulative, instead it diminishes with every payment,
and real estate ensures the value that you borrow will almost certainly turn
around and multiply to be a source of income for you in the near future.
5.
Tax free income: Dubai is very liberal and encourages
investors to make the maximum return on their investments in the country. The
income generated from real estate is not taxable and unlike capital gains laws
in most countries , your wealth is solely yours to keep. This means you can
reach your wealth generation goals earlier and prepare for an early retirement.
Now who doesn’t want that?
6.
Prices are at an
all time low: Due to the
credit crunch, world financial crisis and the general panic among the majority
of the public, property prices have been dropping to all time lows. It is now
possible to buy property at near 2004 prices, and everyone knows the story of
people who bought then. They are the millionaires and billionaires of today.
This is your chance to emulate their success. Buy low and sell high: that is
the only investment mantra that ensures success. Warren Buffett and Donald
Trump are advocates of this philosophy and accredit a huge part of their wealth
accumulation to it. There is no better time than NOW, that’s why it’s called
the present.
7.
Options: There are tens of apartments and
offices available for a buyer to choose from. This is the best time to shop
around and consider all the options available to you. It might be that you have
previously been unable to buy your dream home on the Palm, or a stylish
penthouse in Downtown. Now, these are available in multitude and all yours for
the taking. Explore your options and you will be surprised to find the property
of your dreams is well within your reach, you simply need to go out and grab
it.
8.
Better quality of
advisory and investment support:
Mortgage brokers, insurance brokers and real estate brokers are working hard
for your money. You are the only avenue for their businesses to thrive and they
know this. With fewer transactions taking place in the market, the piece of the
pie is getting smaller every day. Competition between these firms is becoming
stronger resulting in the cream rising to the top. It is now survival of the
fittest, and the only brokers surviving are the ones that are ready to embrace
a changing market and deliver exceptional client service advisory to their
clients. Those who didn’t take their job seriously and were only in this market
for the lucrative returns , are now going back leaving only the best agents to
service you.
9.
Lounger investors – There are many buyers on the market
that are simply lounging and watching the situation. Some cant pull the trigger
, many won’t pull it. Even more have to sell a property they own before they can
buy something new. Still others are edgy about the current scenario , and don’t
want to invest until they see a turnaround. The reality is simple. We always
believe what we see in front of our eyes. Assumptions are simply castles in the
sky and dreams that might or might not come true. Why take the gamble? You see the
fantastic deals around you. You witness the panic in every seller’s voice. Your
gut tells you it’s the best time ever to buy. Yet you hold on because of
another’s opinion. If you wait any longer you’ll miss the boat and give up your
chance to create the life that you want for yourself and your family. ACT NOW.
Action will produce results. Thinking and discussing will only augment doubt.
This could be a very expensive price to pay for folly.
Real
estate investment is one of the least risk investment options available to you
as an investor. The size of your investment has no real impact on the returns
you can get. The proportions of investment to return are always directly
proportionate. The yield remains the same. It is crucial to consider that you
should never grab the first investment that comes along , but rather the best
investment. We at Cayman Estates have an exceptional team of advisors that can
facilitate this for you. It is necessary to pick an investment that you are
comfortable with. Let us guide you on the path to realizing your real estate goals
, and ensuring a long-term future investing in real estate.
Please
call us to book an appointment with our consultants on the number below.
Cayman
estates: Phone : +971 4 341 8384 , Fax : +971 4 341 8685
This
article is written by Clayton Vallabhan, a real estate advisor at Cayman
Estates Dubai. 20th Jan 2009.