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Anu Khullar - RE/MAX River City
282 Calgary Trail NW, Edmonton, Alberta
P: 780-439-7000
F: 866-293-5424

Tuesday, July 21, 2009 - Investing vs. Speculating - by Don R. Campbell

Just like the stock market, not all towns see real estate values increase in a booming market and many actually under-perform.  Your job as an investor is to pick areas providing the best returns for the lowest risk. There is a simple and easy strategy for doing this: Focus on the fundamentals, not emotions.

Successful real estate investing is all about identifying a town or neighbourhood that has a future, not a past.  Sadly, many investors like to invest based on past performance so they’re constantly chasing the market.  That’s called speculating - not investing.

To dramatically reduce your risk, ask key questions, and don’t fall in love with a property.  There are 13 major influences on the long term values of property.  Each of these affects real estate prices in both directions, and each one is an important component in finding which way real estate values will be going.  The more yeses you get, the better the market will perform.  

1. Is the area’s average income increasing faster than the provincial average?
2. Is the area’s population growing faster than the provincial average?
3. Is the area creating jobs faster than the provincial average?
4. Does the area have more than on major employer?
5. Is the real estate booming in the surrounding region more than where you’re looking?
6. Will the property value benefit from a major new development nearby?
7. Has the local and provincial political leadership created a growth atmostphere?
8. Is the region’s economic development office helpful and proactive?
9. Is the neighbourhood located in an area of renewal or gentrification? Or is it in a war zone?
10. Is there a major transportation improvement occurring nearby?
11. Is the area attractive to Baby Boomers?
12. Is a short term perceived problem (negative media stories, short term layoffs) occurring that will disappear?

Finally and most importantly of all: Do you have someone to impeccably manage the property? Without quality management (even if it is you) - no matter how good the area - the property will always under-perform and be undervalued.
posted in News at Tue, 21 Jul 2009 21:08:41 +0000

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