The Market Is More Important Than The Real Estate Deal

Location is the most important word when come to real estate investment. I am agreed. But, location is shouldn't be measured based on geographical alone. It has to be based on the market concept of supply and demand. In the idea case, a great location is based on the market that the supply is low and the demand is high. Meaning, even though a property that is located at a metropolitan city, it does not justify the soundness of the location. As in from the perspective of economic, "location" in real estate investment is the "market".

In real estate investment, the most frequent mistake that people make is making first priority on looking for a property deal. These type of amateur real estate investor always just go to any major cities, especially capital cities which the properties prices are high, and the communities seem to be crowded, starting to picking up 1 or 2 good looking houses, buying at broker offer price, and believe in a year or two, price will be higher. They always fall prey into the jargon and sale pitch that broker gave to them. They invest in gut feeling rather than a rational facts and findings.

In any place in today civilization, before looking for any property, the first priority is doing research to the market that you interested in, market research that will provide you information which related to supply and demand. For current supply normally is the number of housing start, a overhang rate of constructed building available, the new launching housing rate, and the unsold under or non- constructed units in the market. For future supply, that will be the pre-planned housing start in coming years. All these information can be obtained from well established broker firm, and real estate government agency. For the demand is a little bit tricky. Demand normally can be estimate from the absorption rate of new housing launch. In other word, it is the sale performance. Occupancy of the property in the given market also very related to the demand. If the vacancy is low, the demand is strong; if the vacancy is high, the demand is soft. Employment opportunities, schools and universities also a indication of demand for now and future. Population are in the function of employment, that the basic of economic. Housing price at particular market also has a very strong indicative to the demand. If the housing price on particular area is high, people at median income group could not afford to buy any houses. they are only about to rent. Therefore, rental market for medium cost apartment could be great vice versa. Buying right is profit when you buy, not when you sell. In order to archive that, the market is obviously more important than the property itself. Identify a market should come first when come to real estate investment!