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Thursday, 6 December 2012

GOLD AND REAL ESTATE COMPARED ! READ ON AND SEE THE BETTER INVESTMENT !

Rarity, durability and scarcity are some factors that have made gold and real estate the most sought-after forms of investments in the world. As a result gold has been used by many governments as a type of legal tender or money. Real estate has also been used by many to lock up capital for a life time. But which of the two is a better investment ? In this article I compare the merits and demerits of gold and real estate so join me in this exploration and discover where you can put your hard earned cash.
 RARITY / SCARCITY
Gold is a scarce commodity, it can not be created but it is extracted from the ground. Such scarcity enables it to return its value. Real estate also has the same quality in that the supply of land is finite but the human population is always increasing. As a result the demand for land is always rising   above supply a situation which means that the value of land will in turn continue to increase. Hence the saying is sure that says " buy land they have stopped making it."




DURABILITY
Gold is durable it does nt get rotten or worn away. It therefore become a storehouse of value especially during times of political, social and economic uncertainties. Real estate also has an aspect of durability in that it out lives revolutions, financial crisises and civil unrest of whatever nature. In Zimbabwe during the inflationary era businesses engaged in what is known as land banking through which they invested zim dollar profits into land. This way the money was banked and protected from high levels of inflation.Now more than ten years later they are selling this land and reinvesting into their business operations.

PORTABILITY VS SECURITY
Gold is portable therefore this makes it convinient as medium of exchange. However, such portability is security disadvantage since a thief can steal or rob it. As a result gold has to be kept in a safe or vault. Real estate is immovable therefore, once transfer of ownership is effected its not possible for a person corporate or non corporate to steal the property. Even in cases of property fraud the prospective buyer is the one who loses not the property owner.

REGULAR INCOME
Gold investments does nt have income that they produce. On the contrary real estate does have income known as rent. Normally, in terms of return on investment (ROI) rent is at least 10 % per annum. A plain stand that does nt have any structure can also produce rent because there are commercial uses that can be operated on such property. These include car sales businesses and brick moulding to mention only a few.

MINIMUM INVESTING REQUIREMENT
The minimum amount required for investing in gold is however lower than that for real estate. For example with $1 600.00 you can buy an ounce of gold but with real estate this amount is $2 900.00 short of the minimum required for the smallest stand in a small town like Marondera. In my previous articles however, I have proposed that individuals can pool their funds together and invest in property development. They will then sell the value added property and share the profits according to the percentage of contribution. They repeat this until each individual is free standing and can invest on his own. Read more on this in my article titled, MAKING MONEY FROM REAL ESTATE INVESTING WITH SMALL SAVINGS.

HISTORICAL VALUE : GOLD VS REAL ESTATE
Historically,the value of gold has proved to be unstable. It has declined by over 70% during the 1980s and 1990s. One of the reasons for this is that gold has a low industrial demand and its value is largely decided by investors hence its comparetively less stable. After  June 2008 it reached an all time high of over $980 per ounce, though this is favourable it can also mean that the gold's market is oversaturated and is due for a market correction any time soon.

Historically, in Zimbabwe and else where the value of real estate has always increased mainly because the demand for land that is finite is driven by infinite human needs for shelter. While the supply of land is limited the human population has been increasing. Any human activity needs land whether commercial, residential, or industrial. In Zimbabwe there is a housing back log of at least 2 million units which means real estate values will continue to appreciate for a long time. If you are looking for a secure investment that will not just lock up value but also give a regular return on investment and you are given to choose between gold and real estate then I advise you go for real estate. The future of the latest increases in the value of gold can not be guaranteed therefore investments in that commodity are not with certainty.



OTHER TOPICS;




HOW TO SELL PROPERTY IN A MONEYLESS MARKET?

How do you sell a property in a moneyless or illiquid market ? This is the million dollar question in the minds of those who want cash for their investments. But how can you possibly do it? In the past five years of my real estate career I have discovered an answer and that answer is the needs-focused marketing strategy. This strategy works because the liquidity problem creats serious competition as market players wrestle for the little cash available, so in order to survive this struggle one should be as competitive as possible through sharpening the needs-focused strategy. I will define this strategy later but for now I shall start with simple but important basics you should know first.

Making Money From Real Estate Investing With Small Savings

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Acquiring good investments is a great desire in people who save money. Unfortunately many Zimbabweans are unable to invest in these because of funds that are below the minimum required. Its therefore a pity that many holders of small savings end up losing capital as they purchase items that are more of consumables than assets.
Real estate is a genuinely great area for investing into which people the world over put surplus cash and then lock up capital for a lifetime. Small players should therefore take advantage of it. It is however unfortunate that these days many small savings holders are buying cheap motor vehicles of Asian origin. Despite the fact that these immediately begin to depreciate the moment they leave the showroom, their prices are falling also because they have flooded the market. But real estate on its side is in a situation made of many positive factors. Official records that state that there is a backlog of at least one million housing units bear testimony to this inference. Real estate can bring in rental income of about ten percent per annum. It is also true that the stars of this game like Robert Kiyosaki and Mukesh Ambami are making more than ten percent in few months through property development. 

Estate Agent! For what?

One of the most critical decisions you can ever make in life is to buy or sell immovable property. For buyers the usual motivator is the basic physiological need for shelter. There are many other motivators but whatever they are the underlying factor is when undertaking real estate deals you need a property broker who will not short-change you and give you a regrettable deal.

Some people may never want to hear anything about estate agents because they have been victimized or probably know of a close friend who was victimized by purported agents. This fear though justifiable can however overshadow the positive role that is played by professional brokers. There is also a risk that emanates from venturing without guidance into an area that have many technicalities. When many pitfalls in the form of technicalities lie along the way, getting expert help can show the real meaning of saving money.           

5 comments:

  1. thanks mr gutu. in reference to our discussion pertaining the time that is taken to finalise selling a house, that time is determined by a number of factors like availability of finance and time taken in processing relevent documantation like tax clearance certificate. however, its possible to do it in two months all things being equal!

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  2. good stuff.Thank you bra

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