Archive for November, 2009
PROPERTY INVESTMENT OR THE STOCK MARKET?
To obtain an accurate picture of house price performance versus the stock market, it is necessary to look over a longer period such as the last 35 years. In the UK house prices have increased 11% per year on average, whereas the stock market has produced around 13% growth – at first sight this suggests that the stock market would be a better place to put your money.
Bear in mind that many people borrow money to purchase property and that the interest payable on this loan is usually covered by the rent charged to a tenant on the property. Therefore, property growth should perhaps be considered in relation to the deposit paid for the property rather than assuming the property has no mortgage.
So let’s assume the next 10 years are much more modest in growth and compare £20,000 invested in the stock market earning 5% pa vs £20,000 invested as a 10% deposit on a property that only grows at 2.5% pa and the rent covers the mortgage.
ASSET CLASS Assumed Return %pa Capital Growth after 10 years
STOCK MARKET 20,000 5.0 12,578
PROPERTY 20,000 (10% deposit on a 200,000 Property) 2.5 56,017
The figures speak for themselves – by gearing your investment with borrowing you can make your investment work much harder for you.
If the big hotels are coming so will the investors
Pattaya’s first themed beach resort hotel the “Centara Grand Mirage” (CGM), officially opened its doors to the public on Tuesday the 3rd November 2009. The resort hosted a wonderful “Lost World – Indiana Jones” theme party, which was well received by over one thousand visitors and dignitaries alike, making it Pattaya’s “Party of the Year.”
Located on “Wong Amat Beach” in North Pattaya, the newly constructed 5-star resort hotel was designed with a “Lost World” concept in mind, featuring an outdoor jungle setting and water park as well as many other similarly themed attractions through the vast expanse of prime land that the hotel occupies. It may not quite be the biggest, as far as the number of rooms are concerned, but “Centara Grand Mirage” executives believe that it is the best in terms of quality and what it has to offer its clients.
Prices start at only 1 million baht for 1 bedroom fully furnished
PARK LANE JOMTIEN RESORT IN PATTAYA
The concept and planning that went into Park Lane Jomtien Resort was the result of extensive market research within Pattaya and Jomtien areas. The intention of the research was to find out what people really needed and wanted when looking for an apartment in Thailand.
Park Lane Jomtien Resort is the result of the vision and dream requirements of the buyer rather than the developer and includes all of the prerequisite needs and wants of you the customer. (Possibly the first time this has been accomplished here in Thailand.)
Prime Location in Jomtien
The Apartment Buildings occupy a strategic position with walking distance to Jomtien Beach, only 600 meters to Sukhumvit Road and within 5 minutes you can reach some of the regions finest restaurants, shopping centers and the best entertainment available.
A number of world class golf courses on the Eastern Seaboard are within a 30 minute drive.
Be Greedy When Others Are Fearful
In times of uncertainty, when many fear the sky is falling and that there is no hope for recovery, the wise investors plant their seeds. The wise investors are not bothered that the seeds will not grow into anything for many years; This is expected and can be considered the price of admission for any good deal. This is because the wise investors fears not, for they know that when others are fearful, it is time to be greedy. When stability returns to the market, those who were fearful will turn into the greedy, and those who were once greedy will sell for large gains and return to fearfulness.
The famous investing philosophy to be fearful when others are greedy, and greedy when others are fearful comes from the king of wise investors, Warren Buffet. This philosophy is timelessly profound, can be applied to any form of investing, be it real estate, the stock market, etc., and is simple to understand.
When others are greedy, it commonly means a recession is soon to follow, or at the very least that a bubble exists. You should be putting into consideration all of the potential risks when you do investments in a time of greed. However when others are fearful, it usually means we are in a deep recession or soon near it. This is the time to be greedy, when prices are dropping like flies because people lose perception of value in the midst of all the chaos. During times of fearfulness is when all the bargains can be found, and where the seeds are planted.
Our economy will recover and collapse time and time again, that is for certain. What isn’t for certain is whether you will keep a clear head through it all and stay the wise investor.
Real Estate Investing Pros and Cons
Although it’s debatable whether real estate investing is superior or inferior to stock market investing, what isn’t debatable is that real estate provides a multitude of ways to make money in the long run. There are many reasons to choose real estate investing over stock market investing, and many reasons not to. Personally I believe both are great investments, as diversification is one of my investing rules to success. Have said that, here are some of the major pros and cons of real estate investing:
Pros of Real Estate Investing
A Tangible Asset
Real estate is a tangible form of investing; You invest in properties, and you can physically see and feel your investment. This is somewhat of a luxury, as you can rest easy knowing at the end of the day that your investment isn’t going anywhere (unless it’s a mobile home of course). With stock market investing, you only have a computer screen showing you what you own… unless you request to have hard copies of your shares.
True Value No Matter The Economic Health
When it comes down to it, no matter if you overpaid for a property or got a great price, you still own a piece of property. Real estate will always have value, even in the worst of times because real estate is one of our basic needs. People need homes to live in, businesses need places to conduct business, and real estate will always be in demand for that reason. This doesn’t mean you can’t lose money in real estate, but it does mean that if you hold a piece of real estate free and clear, you own an asset with true value.
Efficient Markets Don’t Truly Exist
With real estate investing you don’t really have efficient markets, or markets with true transparency like you do with the stock market. What I mean by this is that you can’t just easily come up with a value for a property; You can do your due diligence and reach an estimated fair value price, but it just doesn’t compare to the kind of research and information available on the stock market. This is a good thing though, as inefficient markets present great opportunities for bargain priced deals. Sometimes people just don’t know what is the right price to sell at, other times people are desperate and price their property extremely low. If you are familiar with your local real estate market you can easily identify these deals and invest in them.
Cons of Real Estate Investing
Not Liquid At All
Unlike the stock market, real estate investing is not a quick buy and sell atmosphere. Even if you bought a property and had a buyer lined up for it the next day, closing the deal would still take about a month on average. This can be a problem if you need liquid cash immediately, and it’s a definite disadvantage compared to stock market investing.
Steep Learning Curve
In real estate you have to be knowledgeable in many different ways, and you have to have experience (or the ability to learn quickly) to overcome many little oversights or difficulties that will often come up. Knowledge is required in every sub category of real estate: mortgages, titles, insurance, construction, negotiations, market familiarity, appreciation potential, income potential, etc.. you have to be somewhat of a jack of all trades if you want to invest properly or it could cost you everything.
Significant Liabilities
If you own shares of a publicly traded company, you are not held responsible for the company’s actions and thus cannot be held liable for any illegal activities. However with real estate investing, you are pretty much a target for the sue-happy type. You’ll need insurance to protect yourself from the shady tenants who try and reach in your pockets, or when someone accidentally hurts themselves on your property that was entirely their own fault.
5 Traits of Every Successful Investor
Every investor has their own strategies, methods, and techniques to achieving success. Though despite these differences, all successful investors share the same distinct traits which truly separate them from the herd. The five traits of a successful investor are:
1. Highly disciplined and committed
Discipline is the backbone of a successful investor. Being highly disciplined means you are committed to your efforts so that you are always prepared. If you want to be successful in the stock market, you need to commit to it. There is no such thing as a free lunch. Successful investors don’t let the hurdles such as previous investing failures get in their way, and neither should you. If you know how to invest properly, discipline and commitment will ultimately be your gateway to success.
2. Invests without emotion
Emotions are the handicap of the novice investor. Successful investors know that rational investing is fundamental, so they disregard their emotions while analyzing their investments positions, decisions, and ideas. If emotions are thrown into consideration while investing, the thought process of a rational investor becomes clouded and often leads to failure.
3. Always up to date with the market
A funny thing about the stock market is that everybody has the same information, but everybody interprets it differently. Successful investors are always up to date about the current market by using unbiased financial media sources to get their information. The stock market is full of variables that can drastically influence market prices, so staying on top of those variables is crucial.
4. Possesses a realistic outlook on investing
Having a realistic outlook on investing and success coincides with being highly disciplined and committed. Successful investors understand that they probably will not become the next Warren Buffet, by which I mean they won’t make astronomical returns on their investments. However, humble expectations often lead to high returns, as an investor without excessive greed will have a clear state of mind and will invest properly.
5. Always has a plan
Not having a plan while you invest is like a coach telling his players “Just go out there and win”. Sure, if you’re lucky and/or naturally talented enough, you might make a few successful investments, but this plan (or lack of) hardly is effective in the long term. Successful investors understand the importance of having a plan. They know where they want to get in, where they want to get out, what they will do if something changes or goes wrong, and what their goals ultimately are. Having a plan keeps an investor focused so that they will stay rational while they invest.
Real Estate Investment, Real Estate Investing
Real estate investment involves the commitment of funds to property with an aim to generate income through rental or lease and to achieve capital appreciation. Real estate refers to immovable property, such as land, and everything else that is permanently attached to it, such as buildings. When a person acquires real estate, s/he also acquires a set of rights, including possession, control and transfer rights.
Understanding real estate investment is crucial because it usually involves a substantial investment and a long-term one. Moreover , the real estate market can be unpredictable. This is particularly important when one goes beyond buying a home to actually ‘investing’ in real estate. There are a number of ways in which an investor can participate in the real estate market.
Real Estate Investment: Rental
One can opt for real estate investment with an aim to rent the property out to a tenant. The owner (landlord) earns a continuous stream of rent from the tenant, but is responsible for paying the mortgage, taxes and any costs associated with maintaining the property. The owner also benefits from capital appreciation (a rise in the value of the property over time). The landlord runs the risk of not finding a tenant and could suffer negative monthly cash flows, with mortgage payments and maintenance expenses still to be borne. As compared to owning stocks and bonds, rental real estate requires a significant amount time and effort to be devoted by the landlord.
Real Estate Investment Groups
Real estate investment groups are similar to small mutual funds. They are set up for rental properties. While an investor may own one or more units, a professionally managed company acquires, builds, maintains and lets out all the units on the properties in exchange for a percentage of the monthly rent.
www.condo-for-sale-in-pattaya.com
Foreign exchange and how it affects the Thai property market.
In resorts such as Pattaya, the foreign exchange rate is keenly watched by all. Not only does the level of the Baht dictate affordability of all services to overseas visitors but also, more crucially, it has a direct impact on the property market.
While a weak currency would appear to be the best scenario for the Thai property market, allowing foreigners to buy property cheap, it does not necessarily bode well from an investment perpective. In the first place, rental returns will be forthcoming in the local currancy and so the value of these returns will also be low in terms of the base currency used.
Furthermore a currency that is seen to be on a weakening trend can start to eat into potential property gains. Although property will become more and more enticing to overseas buyers, the fall in the value of the currency may be mean that gains are poor. Indeed if a trend is evident there is no incentive for buyers to rush in and buy if they can secure local funds at a cheaper exchange rate going forward.
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Thailand economy looks like recovering positive effect on property market
Thailand’s Central bank has revised its forecast on the economy from a 3 – 4.5% contraction this year, to a 2.5% to 3.5%, as the economy shows clear signs that it is emerging from recession.
Not least of those signs is a 60% surge in Thailand’s benchmark stock index since March, on the back of reduced interest rates and other efforts to stimulate the economy.
Similar effects are being revealed across Asia, because Asian economies — in the main — contracted mainly because of reduced external demand, and not the collapse of their financial system causing a restriction of internal liquidity and therefore consumption. This is unlike the UK, US et al which contracted firstly because of the latter, and then even further because of the former.
Thailand’s economy has obviously contracted, and quite severely as well, not least because of a massive drops in exports and international tourism. However, many Asian economies did not contract, not least India and China, so regional tourism; Thailand’s biggest market survived relatively unscathed, especially after interest rates across Asia.
Thailand’s own interest rate cuts then allowed Thai companies to cut prices and the survival rate was a lot higher than in the west.
As for the property market, developers quickly adapted to the loss of foreign buyers and began building affordable housing to target the growing domestic demand. This led to a recovery in their fortunes very quickly.
None the less there are thousands of luxury villas and apartments for sale in Thailand, and these will be glad that international demand for luxury property abroad is once again on the rise.
Source: http://www.property-abroad.com/