Lessons in Real Estate

Having traveled the world a bit, I’ve looked at properties to buy from here to Asia. I’ve been tempted to buy a few times though I’ve never made the leap to purchase anything (just not the right time for me). I have learned a few things along the way that have given me a bit of insight into the rules of the game. I thought I’d share these for those who are looking to buy property but especially for those looking to buy property overseas [from the U.S.].

Lesson #1: They’re Not Making Any More Land

Historically, land has been one of the most valued commodities because, not so jokingly, they’re not making any more of it (unless you live near an active ocean side volcano which is beside the point). This one simple fact of supply and demand has created an almost perpetual market for property. No one in history has ever bemoaned themselves for having too much of it.

Lesson #2: Supply & Demand Laws Still Apply To Land

Although supply is fixed, it is offset by the laws of demand. You can own the nicest beach front property on Boracay Island but, if nobody wants it, it’s not worth very much. I’ve known more than one person to get burned jumping at a good deal only to find that they could not turn around and sell their new acquisition. The laws of supply are completely irrelevant without the laws of demand.

Lesson #3: Real Estate Value Is In The Eye Of The Beholder (and sometimes the owner)

How much is that piece of property you want really worth? It’s worth the highest bid. Granted, perceptions are tempered by the economics of reality but the simple fact remains, a piece of property is worth what someone is willing to pay and what the owner is willing to part for. One person might be willing pay $5000 for that acre while another might be willing to bid $20000. The current owner will generally go with the bigger amount (and who wouldn’t?).

Lesson #4: Patience Is The Name Of The Property Game

If you’re buying property to flip it over at a higher price, be prepared to wait. Be prepared to wait for years. Like all markets, the real estate market is unpredictable as it depends upon qualified buyers. When purchasing property in a foreign country, it can be even more difficult to predict the market. Be prepared to wait. If you can’t wait, don’t buy – period.

Lesson #5: Know The Laws of The Land

The legal aspects of buying & selling property differ from country to country. What is true in Asia is not necessarily true in Central America. Don’t make assumptions, ever. If you’re buying property in a foreign country then find yourself a reputable attorney to handle the contract. You don’t want to find yourself in a position of dealing with fraud, squatters, foreign lawsuits, etc. Buying property overseas can be a bit nerve racking but a bit of legal backing will make the process easier for you.

I’m sure there’s many other valid lessons and I know volumes of books have been written on the subject (probably a few million blog posts as well). None the less, those are the things that stand out in my head. Feel free to share any insights you may have. Whether it’s about buying property or selling it off, there’s always things to be learned.

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