Is real estate investment an exact science?

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Is real estate investment an exact science?

Is real estate investment an exact science?

There is no doubt that property/real estate is by far and away the most popular investment asset around the world. People have been investing in real estate since time began and over the years we have seen an array of different property cycles, different scenarios, surprise events and collapses. So, is real estate investment an exact science or will there always be a relatively large degree of risk?

If you read the popular property press you are likely get the impression that property cycles are replicated time and time again in different markets around the world. Unless you dig deeper, it may look as though investment in real estate is fairly simple, pick a growing economy, a buoyant property market with significant financial assistance available and hey presto, success!

If only it was that easy……………

Learning from your mistakes

If you go into real estate investment automatically assuming you will make no mistakes, all of your investments will make money and you will have no issues going forward, you are kidding yourself. History shows us that even the most successful property/real estate investors have had their fair share of troubles, many have gone bankrupt but they keep coming back time and time again learning from past mistakes. The simple fact is that the moment you stop learning from your past mistakes is the moment that you set yourself up for a real fall!

Quote from PropertyForum.com : “While the above question may seem a little bizarre at first glance, if you sit back, think about it, it does make sense to ask the question. In simple terms, should you learn from experiences in the past or should you be looking forward to the next leg of a property market rise or fall?”

Dust yourself down, stand tall and move forward

Perhaps one of the most important aspects of the psyche of a property investor is the ability to learn from past mistakes but not let past issues overly influence future decisions. There is nothing wrong with taking a step back, reconsidering a potential deal and even changing your mind if you feel something is not right. However, do not automatically assume that history will repeat itself and do not become overly cautious, while also controlling any risk, because you could miss out on the deal of a lifetime.

The simple fact is that if you decide to make a career out of real estate investment you will make mistakes, you will lose money, you will likely flirt with serious financial problems but if you learn from your past experiences, there is no reason why you cannot be successful in the future.

History might repeat itself, in hindsight!

The future direction of any real estate market around the world is determined by an array of local and international factors. It is very easy to look back in years gone by and overlap historic property cycles to come to the conclusion “that was a no-brainer, it was bound to happen” when at the time it was perhaps not as easy to see. Hindsight is a great thing in any investment market, looking back and learning will help in the future but do not automatically assume that history will always repeat itself.

There will be times when cycles move in similar directions to those in years gone by, there may even be very similar scenarios arising in different markets around the world but that does not mean that the end product will always be the same. Learn from your past mistakes, learn from your successes, monitor the array of aspects associated with international property markets and above all, when you have the experience, use your gut feeling. If it feels right and it looks right then go for it, if it looks right but your gut feeling is to leave it, then perhaps you should learn to go with your natural reaction?

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