1.1 Real Estate Investment
Real estate investment refers to the event where there are selling and buying all forms of asset such as land, buildings and stock of real estate companies and it used for residential, agricultural, commercial or even for the industrial use (Areiqat & Zamil, 2011). As a potential buyer or investor, he/she will prefer to find any type of real estate that is cheaper and in future could be sold at a higher value. Owner will allow his/her real estate for renting to tenants that are able to pay the rental fee at the mutual parties agreed price and the payment will be the profit for the owner. Therefore, the more the owner has his/her real estates to be rented, the more profit he/she will gain from the real estate investment. This is an example to show what will the owner or investor will gain from a small scale of real estate investment, but imagine if an owner of a building or even a warehouse, he/she will enjoy a larger profit. However, this may depend on value of the real estate. Figure 1: The Real Estate Market Cycle
Investors should aware the real estate market cycle. By understanding the cycle, this will help investors to predict the value of the real estate that they own and what they should do by considering the
…show more content…
As at 16 December 2007, there are 99 listed property companies and 13 REITs listed on Bursa Malaysia. As an emerging securitized real estate market, the size of the Malaysia securitized real estate market is relatively small in comparison to other developed countries’ market. In spite of Malaysia was the first country to introduce REITs in Asia, the market capitalization of Malaysia REIT market is substantially smaller than other Asian markets such as Japan (US$49 billion) and Singapore (US$19 billion) (CBRE,
The housing market is very unique as unlike other goods and services, houses have permanence, it is a fixed location good causing the rules of supply and demand to be taken to new extremes. In the case of the Toronto housing market we can view in almost real time the role supply and demand play on he ever increasing house prices, additionally the fundamental economic issue of scarcity is made extremely apparent by the limited size of the city of Toronto.
In the essay “The Mansion: A Subprime Parable,” Michael Lewis unfolds the real face of the American dream. He talks about his own personal experience in his look out for a house and his struggle with the house he rented. Most Americans have bought houses they cannot afford. Banks offered loans, they have lent mortgages that many don't have enough financial resources to pay them back. Agents have falsely guaranteed that real estate prices will be in constant rise, they promised them that there will be no declination in prices.
The reality of the worst financial crisis in the last 80 years has led to wide speculation of its causes. While a plethora of theories have been offered, none have been as persistent and as patently false as the assertion that the Community Reinvestment Act of 1977 played a significant role in the housing bubble collapse. Critics of the Community Investment Act (CRA) argue that by pushing banks to meet the credit needs of low-income borrowers, the law forced lending institutions to take on riskier loans that proved to be fiscally irresponsible. The securitization and speculation of these low quality loans led to the housing bubble collapse and the wider financial crisis. This argument is subject to a number of problems, namely: the CRA never mandated lower lending standards, the CRA was enacted over a quarter of a century before the housing crash took place, none of the hundreds of banks that collapsed were subject to CRA legislation, CRA loans had a historically low level of default, and CRA loans comprised an extremely low amount of subprime loans during the relevant period of the crisis. While the CRA may have played some small part in the collapse of the housing bubble and subsequent financial crisis, it is clear that its effect was negligible. There are simply too many mitigating factors that limit the extent to which the CRA could have adversely affected the housing market for the theory to be plausible.
“The housing market will get worse before it gets better” –James Wilson. The collapse of the United States housing market in in 2008 was one of the most devastating moments for the world economy. The United Sates being arguably the most important and powerful nation in the world really brought everyone down with this event. Canada was very lucky, thanks to good planning and proper preventatives to avoid what happened to the United States. There were many precursor events that occurred that showed a distinct path that led to the collapse of the housing market. People were buying house way out of their range because of low interest rates, the banks seemingly easily giving out massive loans and banks betting against the housing market. There were
Fixing and flipping houses is one of the more popular strategies for making money in the real estate market. It is one of the more looked down on strategies as well, but that is easily overwhelmed by the fact that the good old fix and flip is one of the most profitable strategies in the business.
Everyone will experience buying a house at one point or another. Why not have a real estate agent help you and guide you through the process? I chose this occupation because it interests me for many different reasons. Wouldn’t you like a job where your schedule revolved around your life? Or you could control the growth of your business? Or basically over time, be your own boss? These are a few of the many reasons the real estate industry has caught my eye.
Granada Hills Market The cultural that I decided to explore and learn about is the Middle Eastern culture. To gain knowledge on the Middle Eastern culture I chose to visit a near by Middle Eastern market called the Granada Hills Market. As I entered the Market, I was able to notice various products and characteristics from the market that I am not accustom to seeing at the markets that I usually attend.
Buying or selling a house or an apartment is one of the biggest decisions of a person’s life. And when selling or establishing a price for real estate, people seek out real estate agents to do the dirty work. A real estate agent has to convince a prospective homeowner that he or she is trustworthy and knowledgeable. In many ways, the agent acts as a counselor to individuals and families about to embark on a huge commitment. Real estate agents have a thorough knowledge or real estate market in their community. They
When working within the realm of real estate, flipping houses is one of the most lucrative projects one can undertake. The premise of this idea is buying a home in need of repair, renovating it, and selling it at its newly appraised value. In high school, I worked alongside my mother to renovate a home in our small town of Trinidad, Colorado. The invaluable lessons I learned throughout this business venture gave me insights into the inner workings of house flipping. What I gained from this experience will lead to better decision making if I choose to take on another project. With a $150,000 budget, the most important aspects to focus on in a renovation would include updating appliances, applying fresh paint, installing proper flooring, and revamping the exterior. Assuming that the home being foreclosed on costs $110,000, I would allocate $20,000 of my budget for renovation expenses. This leaves a $20,000 buffer to be used as an emergency fund.
Economic Theory and Housing Market The core of economic theory is based on supply and demand. Demand is what consumers are willing to buy at any given price. Supply is what suppliers are willing to sell at a given price. We can then relate this to the housing market.
“One out of every two hundred homes will be foreclosed every month, making 205,000 new families enter into foreclosure,” Mortgage Bankers Association. The housing industry in the United States is undergoing an unfortunate crisis. There are way too many homes being foreclosed, which cause a ripple of problems.
When prices increase, the quantity decrease (Graph 1) and new firms enter the market in order to make economic profits. However this does not mean the real estate agents or brokers earn more money. On the contrary, the prices they charge may increase, but the number of houses each sell do not change (Goolsbee, 2005, Online). From this it is evident that the price of products in the real estate market is not affected by the entry of new firms.
Investment is the condition that we bought an asset or item today in hoping that it will appreciate or provide incomes in the future. In the view of Economics, investment is the purchase of goods that are not consumed today but it will be used in the future in order to provide wealth. In the view of Finance, investment is defined as possessing a monetary asset with the idea that it will provide extra income in the future or appreciate and then it will be sold at a higher price. Besides, investment usually involves in diversification of assets in order to avoid unnecessary and unproductive risk.
This paper begins by discussing the definition of investment. The research then continues and discusses the types of investment the lending investment,speculative investment and the ownership investment together with their sub parts. The next part of the paper deals specifically with the different types of investment companies, the open end investment, unit investment funds and the close end investments. After, there is a part that deals specifically with the Investment objective. By the end of the essay, the conclusion is reached that Investment is somehow important to every individual because of the good thing that it gives especially to those who rarely seek to have money for their future.
Real estate is a fixed, tangible and immovable asset in form of houses or commercial property (Seldin & Richard 1985). Real estate market involves developing, renting, selling/purchasing and renovating of these assets (houses). Market participants includes developers (contractors, engineers, and so on), facilitators (mortgage companies, real estate brokers, banks, management agents and so on), owners, renters (leasers) and renovators (Seldin & Richard 1985). Like other economic markets, real estate markets have internal and external forces that make impacts in the market (Seldin & Richard 1985).