Heres how you can beat the Property index
Sometimes simple things in life are the most difficult to understand. Lets check it out. When you hear business reports on stock market, there is a general tendency to bunch the stocks together in an index. The movement of index apparently become the mirror of the sentiment working in the market. If you take a closer look at how indexes are formed. Any certain index comprises of different members . Collectively their prices are interpreted as averages and it is the average that indicates if its Mr Bulls party or Mr Bear is in control. To make the picture even clearer look at the construction of averages (index) again. Say : the technology sector (in terms of technology index) has moved up by 10 percent and it comprises of ten technology companies. Do you think the prices have moved in unison of all of these independents companies of the index. Absolutely not. The individual companies may have severe skews as long as it averages to 10% growth. So two three four five or even 9 of them could be out of flavour but still the index depicts good growth. Is that Fair ?Why don’t you decide.
Sometimes simple things in life are the most difficult to understand. Lets check it out. When you hear business reports on stock market, there is a general tendency to bunch the stocks together in an index. The movement of index apparently become the mirror of the sentiment working in the market. If you take a closer look at how indexes are formed. Any certain index comprises of different members . Collectively their prices are interpreted as averages and it is the average that indicates if its Mr Bulls party or Mr Bear is in control. To make the picture even clearer look at the construction of averages (index) again. Say : the technology sector (in terms of technology index) has moved up by 10 percent and it comprises of ten technology companies. Do you think the prices have moved in unison of all of these independents companies of the index. Absolutely not. The individual companies may have severe skews as long as it averages to 10% growth. So two three four five or even 9 of them could be out of flavour but still the index depicts good growth. Is that Fair ?Why don’t you decide.
In real estate prices move in unison, . That’s the reason why if a certain area becomes a hot spot all the dwellings located I that area benefit with the price rise. Are you getting the picture. Now lets see how we can beat the property index easily. So easy you wont believe its true but trust me that’s how it works.
Look at the national average in your country. This is the index of all the properties in the country and their price movements. Remember that the slow growers are an equal component and if you discard the slow area, undeveloped interior country side , your chances to beat the average becomes 100 %. Keep going, look at the major metros. The the degree by which you would beat the index becomes even better. What about a good spot within a metro city? Or a mini metro. Look at the trends, Read the below blog on how an area becomes a hot spot and I am sure you'll have the aha! moment in your investing life. So easy it is to beat the index and get on top . Remember when you buy in a growing area with high returns, its not just the capital gains that you get but the area also receives higher rent. Your investment property can soon become a cash cow and add pounds to your property portfolio.
Wealth Basics Rule number # 2: Identify growth areas (hot spots) before buying real estate.
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