In the halcyon days of the mid-00s, property investment was the choice for families looking to secure their financial future. The concept was so simple: you buy a property, likely make improvements to it, and then either sell it on at a profit - which became known as property flipping - or rent it out to generate a consistent income.
The wonderful thing about property investment was that it worked. The market was rising, and people were able to make a profit even without making any improvements to the house or finding a tenant; they could sit back, wait for prices to rise, and sell on at a substantial profit. Those who did choose to flip or rent their property out fared even better, and many families found the financial security they had always craved was suddenly accessible and simple thanks to the world of property.
Then the financial crash happened
The financial crash of 2007/8 took the wind from the sails of the property investment dream. The market crash, mortgage providers became more hesitant to lend, and it seemed the bubble had very much burst. A financial activity that had become so commonplace it was depicted on TV shows - Modern Family is one example of a show that had a property flipping storyline - somewhat fell by the wayside, as families had to focus on financial security in the present rather than looking to their future.
It’s now been ten years since the financial crash, and while property investment has never quite reached the giddy heights of the pre-crash days, it’s still one of the most commonly suggested methods of investing in future financial security. There is, however, one big question that lingers: is it still worth it?
Was the property investment craze a bubble?
Assessing the current housing market
Property investment requires good background knowledge of the current housing market, but this is where we encounter our second obstacle to overcome when seeking to ascertain the value property investment offers: no one really knows what’s going on with the housing market.
At present, the US housing market is rather positive… but it is also plagued by predictions of doom in the future. However, to put these predictions into perspective, experts have been predicting a crash for many years, but it has yet to arrive… but they could also be right this time…
It’s confusing. So, let’s say this: the housing market is currently believed to be slightly overinflated and due a correction at some point. This may not happen for many years, or it might happen tomorrow - no one really knows. This means that if you’re considering property investment, you need to keep three critical factors in mind:
When assessing the housing market in terms of property investment, it’s also important to look at demand. In this field, the US market seems healthy: demand has been consistently high over recent years, so those looking to flip a property should have plenty of buyers available to them. There’s also good news if you wish to buy a house to rent it out: renting is becoming more common, so finding tenants should be relatively simple.
Overall, the picture of the US housing market is fairly conducive to those who wish to invest in property. Yes, there’s some shakiness around the sustainability of the market, but this is nothing new - and can be somewhat mitigated by sensible investment choices.
Considering the opportunities for overseas property investment
One aspect of property investment that is often overlooked is the potential in the overseas market. Many investors choose this route over investing domestically in the hopes of capturing a rising market and benefitting from the strength of the US dollar, and it’s well worth considering.
If you want to contemplate investing overseas, then there are a few pointers to keep in mind:
So, is property investment still a viable choice?
While the heady days of the property investment craze have cooled over recent years, it would seem that property investment is still a good choice - with a few caveats. As with most forms of long-term investment, your willingness to research is a key factor; without research, property investment can be an expensive mistake, but done correctly, it can be hugely beneficial.
The second most important caveat is the need to engage with property investment with complete honesty, acknowledging that there is a chance that the market will crash. While a market crash might not necessarily ruin your investment, it can impact the profits you can generate or the rental yield you are able to obtain - problems that take a long time to remedy. As a result, it’s best to start small, spending far less than you can afford - if things go well, you can sell and move on to a bigger property; if they don’t, at least you’re somewhat insulated by the lower investment amount.
However, if you can keep the two factors above in mind, then yes, property investment is still a realistic choice for those seeking a strong financial future for their families.