"""Foolish money quits real estate on the premise that one can re -enter to make a killing.
Smart money arranges things to have the facility to buy if values drop.
As soon as one treats this asset class as a share one is in big trouble."""
Selling surplus property into a falling market is brilliant if you can pull it off. High risk high reward, but certainly no fool. A fool is someone who hangs onto an investment out of emotional conditioning. Smart money looks at it like a business, you have to know when to fold.
A line of credit facility is only as good as the valuation of your property, in a falling market valuers are ruthless.
And I have always treated it as a blue chip share - you buy when you believe there is upside to earnings growth or the share is undervalued. Property at the moment is neither, the business case to invest in property now is non-existent.
I recently spoke to an agent who himself questioned the media reporting of house price growth. His agency have in the last 12 months never had so many tenants in arrears to have to take them to court, and whilst there were properties selling, the price was going nowhere, and with tenants not even able to meet current yields, the outlook is bleak.
