Investing in the US Real Estate Market – Is Now the Time?

This is an interesting question, and one which requires a reasonably detailed answer for certain. The short answer is – it depends. Several factors must be considered before we decide to place our money into any investment, and real estate is no different. I will start by suggesting that you put into place a system. The system should be geared around the following questions and considerations:

1. Why do you want to move your money into the U.S. real estate market? Consider this carefully. Is it because your friends are doing it, business associates, or a family member? If so, talk to them. Ask them what there experience has been and where they have invested. Have they realized a return or has there investment depreciated?

2. While we’re on depreciation – In most cases, a real estate investment should be viewed in terms of your long term investment strategy. Real estate investments were never meant to be short-term. Yes you can flip properties, and many people do, however, there is additional risk associated with these types of short-term real estate investment practices. Having said that, you may continue to see some depreciation in your investment over the next few years, but the length of time, amount of depreciation, and relative appreciation over time is dependent upon the market you choose to invest in. You should not let this be of an overwhelming concern if you are in this for the long-term.

3. One way by which you can decrease you level of deprecation is through market research. What do you want to buy? Are you considering commercial, multi-family, resort, single family, or condo? Where do you want to buy? Some markets are less expensive, but they have much more volatility. You must consider the inventory for the area you are looking to purchase, as well as the price. Markets with fewer inventories may be a bit more expensive, but their recovery time will be less and appreciation could be realized sooner.

4. EB-5 investments may also be something to consider. There are regional centers, such as ours here in Sarasota, which can provide real estate investment options that will enable you to benefit from this great program, while making a modest profit.

I strongly suggest that my clients invest in declining inventory, coastal communities like Sarasota or Manatee County, Florida. The reason for this is simple – these areas are desirable vacation and relocation destinations. Sarasota was rated as the Number One place to buy real estate recently on MSNBC. Check out the video┬áHERE. People want to live here and there is no other predominant industry in that the area is dependent on, other than tourism

Let’s look at some statistics for Sarasota’s residential real estate market in February 2010:

Overall property sales in the Sarasota market were up nearly 49 percent over February 2009. The median sale price for a single family home was $150,000, up 5.6 percent over last February’s figure of $142,000.

The months of inventory for single family homes was 10.6 months far lower than the 24.1 months in February 2009. For condos, the months of inventory level was 15.4 months, far lower than the 28.4 months only a year ago. Once the market reaches the 6 month level it is considered to be in equilibrium between buyers and sellers.

Statistically, this area is showing an annual improvement in both median sales prices for single family homes, and a significant drop in inventory level. All of these conditions point to a quickly rebounding market that may be a great opportunity to invest in.

In summary, there are many considerations for the prospect of investing into a foreign real estate market, such as the U.S. However, through proper due diligence, experienced guidance and counsel, and an investment team with you – you can accomplish your goals with minimal risk and high rewards.

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