With the Current Stock and Credit Market Crises, Investment in Real Estate Will Make Even More Sense

With the current financial crisis pervading stock markets in the global economy, real estate once again should be looked at as a serious, long-term investment strategy that can help investors further diversify their investment portfolios in the future. The reality is that the current stock market malaise that has decimated so many long-standing financial institutions and subsequently stock investments and 401Ks is not the only major stock market troubles we have seen in recent times. Arguably, there have been as many as three “bubbles.”The dot-com bubble and decline of the stock market helped push investors into other markets where money was cheap and regulations loose. Because of lax oversight and inaction, the housing bubble was allowed to form. The oil market represents a bubble to many as the cost of a barrel of Brent crude went from $100 per barrel in February 2008, to a high of $145 per barrel by July 2008. Brent crude is now trading under $60 per barrel.Going forward, there are two very real concerns for investors. First, many may be looking at the performance of stock investments over the past eight years and calculating what their true return from those investments has been. Second, many will be asking if their investments can sustain another severe market imbalance in the future. In effect, they are wondering as to where the ‘Fourth Bubble” will come from.All of this gives credence again to having an even broader diversification of investment portfolios. As a result, real estate should once again be seriously looked at as part of an investor’s diversification strategy for several reasons.
First, property valuations have fallen considerably from market highs. Prices in some markets have dipped to 2004 levels. In some instances, prices have dipped to 2003 levels.
Second, real estate has intrinsic value. Unlike stocks and financial-related investments that can see depreciation in their worth down to zero, real estate has inherent value down to the land and will not experience a wholesale collapse in its value to zero.
Third, real estate is real. It can be seen and touched, and managed closely by the owner.
Fourth, real estate has certain tax benefits that can contribute to the overall performance of the property as an investment.
Fifth, a successful rental property as an investment presents an opportunity to create a revenue stream and/or create equity in the home as the renter indirectly is contributing to payment of the principal over time. Regardless of the market and whether appreciation or positive-cash flow rental income is preferred by the investor, the principal is being paid down on the property.
Lastly, based on proposals floated by President-elect Obama, we should expect additional legislation that puts guidelines, regulations and accountability in this industry that ensures proper lending practices and reduces the risk for rampant speculation that has battered the markets in recent times.
Of course, there are certainly risks to holding real estate as an investment in your portfolio. For instance, there may be unexpected property repairs, assessments, or other extraordinary costs that the investor has to incur. So, an investor has to look at real estate also as a business with income and regular and extraordinary expenses.For those investors that are looking for a simpler way to be diversify without the additional headache, a REIT may be a logical avenue to investigate. A Real Estate Investment Trust is a company that invests in income-generating properties to drive returns for its investors. The income-generating properties may be apartment buildings, industrial and commercial properties. REITs allow smaller investors the ability to invest in larger real estate operations that they wouldn’t be able to otherwise. REITs also should be able to show their overall historical performance to investors.Again, investors are faced with the question of how to protect and grow their assets in the future. The stock market’s high level of volatility in recent years has many investors questioning the percentage concentration of their portfolios in stocks and similar investments. As a result, the pressure to further diversify those portfolios will mean that other asset categories will have increasingly greater appeal and should be considered for investment.Overall, real estate presents a great opportunity once again for the long-term investor as outlined above. In addition, the incoming administration has put forth numerous proposals to improve transparency, implement sound business and ethical practices to the industry with the singular purpose to eliminate the probability of a similar crisis ever occurring in the future. All of this will work to give investors options once again for a safer, more consistent and calculable return in the coming years.

Real Estate Professionals in Singapore

Singapore abounds with experts in the property field. These professionals range from top ranking jobs like estate agents and lawyers to the very bottom but equally professional carpenters, who work together to produce a unique skyline for Singapore.The different property experts in SingaporeThe availability and variety of professionals in Singapore may be analogized to a 13 storey ‘condo’ building with carpenters occupying the first floor, other professionals the 3rd and 12th floors and the topmost level occupied by agents. There are approximately 13 professional classes in the Singapore real estate market.AgentsThe agent is the intermediary between sellers and buyers.The licensing of agents is now vested in the Council of Estate Agents or CEA.An estate agent is a person who assists people in selling or purchasing real estate.LawyersA lawyer is a qualified legal practitioner who becomes a member of the bar upon graduating and acceptance. A lawyer must register with the Justice Ministry.Functions:

Document and review purchases, leases, inspections and appraisals.

Assist in resolving insurance titles and environmental issues.

File and represent lawsuits in court in the event of a disagreement during real estate transactions.

Assist lenders and borrowers in foreclosure proceedings.
Mortgage brokersThere are no special requirements or licensing procedures but an aspiring broker must undergo a training course to qualify as an Accredited Mortgage Consultant.All mortgage brokers must be registered members of the Mortgage and Finance Association.All registered brokers must adhere to an industry Code of Practice which insists upon professionalism, ethical behavior and dedication to work in the interests of borrowers.ArchitectIn Singapore, as in other countries, the architect is an important figure in the pre-construction phase of a real estate project because they:

Provide expert advice on designs and drawings of buildings

Offer suggestions on the most suitable contractors for the job

Develop layout plans for real estate buildings

Inspects and oversees the construction work
BankerA banker must register and obtain a license to operate by the Monetary Authority of Singapore.Bankers do not normally engage with individual clients when dealing in real estate, but prefer to negotiate with licensed firms or aggregators who negotiate with mortgage brokers and submit loans through aggregators.Bankers provide funds to all parties engaged in the purchasing of real estate and also to estate developers and contractors.Surveyor The Singapore Institute of Surveyors and Evaluators represent the local land surveyors, evaluators, property managers, property consultants and real estate agents at the professional level.A surveyor:

Conducts or supervises survey operations

Makes calculations of the survey data

Analyses the data and produces the final production map, plans or charts

Offers recommendations for changes

Acts as a consultant in advising his clients on the best choice of survey schedules, logistics, methods, instrumentation, costs and other aspects of the project
InspectorAn inspector can obtain an operating license from the Ministry of Manpower.An inspector:

Carries out inspections on the structural, mechanical and electrical conditions of real estate

Provides information to the estate agent or buyer on how to identify of the more apparent major flaws that may exist in any given home, building or structure.

An inspection does not facilitate the detection of all flaws, problems or malfunctions that might exist in any given home.
Validation surveyorThe validation surveyor must be licensed by the Singapore Lands Authority.The validation surveyor:

Acts as the accountant for structural engineers, mechanical and electrical engineers and other expert consultants

Helps clients obtain value for their money

Evaluates or appraises interests of a specific nature in real estate at any point in time

The evaluation is based on correct evidence from the market
ContractorIn Singapore, the licensing authority for a contractor is the Singapore Lands Authority.In real estate, a contractor:

Is a person or company who has won a contract to engage in the building of a structure for a client

Engages in the actual construction work

Works with the surveyor and architect to construct and complete the project
DeveloperA developer in Singapore has to be registered with the Singapore Lands Authority.The developer:

Is a person or company that buys land in order to build a structure upon it

Must develop a housing project with more than 4 units

Needs to sources available real estate

Negotiates funds for the execution of a project
Financial AdvisorAll licenses connected with financial services are controlled by the Monetary Authority of Singapore.A financial advisor tries to help clients use their monetary resources in the most efficient manner.AccountantAn accountant is a financial expert whose services are also essential in real estate transactions.An accountant:

Possesses the right knowledge when making business decisions about real estate

Has the ability of assessing tax impacts, which is key to the success of a transaction

Spends a fair portion of time studying, researching, thinking and applying systems, financial measures and tax planning for investors
CarpenterA carpenter in Singapore is generally hired by the contractor and is usually licensed to carry out the actual construction work for a project. The carpenter:Constructs under the advice and supervision of the architect and contractorProperty managerA property manager is a qualified expert who is employed by owners of the real estate.Generally, the property manager:

Looks after real estate investment on behalf of the owners

Documents and evaluates potential tenants for occupying rentals

Collect rents paid by occupiers of rental premises

Negotiates contracts and rental terms on behalf of owners

Arranges for proper maintenance work of the owner’s premises, such as cleaning, plumbing and electrical systems