News - Real Estate - Sales
(January 23, 2005)
REAL ESTATE as a means to wealth
When Investing in real estate , the
right location is key like the location
by Kemtek Construction in Drax Hall, Ocho Rios.
The backbone of any economy is
real estate. With an investment you have to look long-term and in
the long run there is nothing to beat real estate.
Some persons may disagree with
those strong and emphatic comments. After all, are not these the
halcyon days of the Jamaican stock market where paper millionaires
are being created? Giddy investors, spurred by last year's bull
run, are dashing back and forth convinced that the market is their
only avenue to wealth.
If one had invested $1 million
in Capital and Credit Merchant Bank's initial public offering two
years ago (with an IPO price of $5), that million dollars would be
worth almost $7 million today (at a share price of $33).
But those are the best case
scenarios, showcasing investments in good companies. It is
instructive to note that in 1995 there were about 51 listed
companies on the Jamaica Stock Exchange. That figure now stands at
thirty eight. Imagine if you had invested in the thirteen or so
companies which have been subsequently delisted.
REAL ESTATE INVESTING
To paraphrase well-known financial
advisor, Susie Orman: One cannot live in a stock certificate. It
is a simple but powerful maxim, one that savvy investors have
known for years: while an investment in the stock market may
provide the best investment in the long run -- and this is no
guarantee wealth augmentation through real estate is the safest
bet one can wager. "Everybody should invest in real estate
It's the most solid investment. It's sure...it's there. It's
Investing in the stock market, it seems, is not unlike chasing
shadows and dust. Not so with real estate investing.
Just ask the United States
investors who are spurning the equities market, opting, instead to
pay premium money for scarce lots in major urban areas (like New
York) and converting them into parking lots. A recent survey in
the United States in the Business Review
Weekly Rich 200 found that 63 per cent
of those surveyed made their wealth in real estate or had
substantial portions of their wealth in real estate.
According to the website, successinproperty.com,
"It is a universally held principle that if you want to
retire rich on a passive income you must invest in real estate.
Now, whilst this is not ground breaking news for many, what steals
this dream from average people primarily is lack of education,
lack of cash flow and lack of capital."
At most, stock market investment
provides dividends semi-annually but with real estate there
is a steady monthly income. And the
returns from an investment in fixed deposits and savings accounts
may not be sufficient to keep ahead of the inflation rate.
The wealth that can be made from
real estate investing is best exemplified by nineteenth century
mogul, John Jacob Astor. His fortune of US$20 million when he died
in 1848 is equivalent to over US$80 billion today. That would make
him the fourth richest American in U.S. history. Only Carnegie,
Vanderbilt and Rockefeller, rank ahead of him while Bill Gates is
The key to succeeding in real
estate is finding the right location. Both Mrs. McEachron and
Clarke advise potential investors to invest in areas such as Hope
Pastures, Constant Spring Gardens, Havendale, Manor Park, Liguanea
and Mona. Emphasised Mrs. Clarke, "when you are buying you
have to buy wise...you have to buy long term." They advise
potential investors to consult with real estate agents who have
the trained eyes to identify the right property for the investor.
Most of those townhouses,
especially the new ones - and those in the $25 million price range
are bought for rental income." These units can command
rental of anywhere from US$2,000-US$5,000 per month. But again,
this is largely because of their location in the Jacks Hill and
Manor Park areas.
Property prices have been going up. They will certainly not be going down at all. The best time to
purchase is now.