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A Question of Value?
January 23, 2009Article by Ray Withers
The term “value” can be used in many contexts – from the value of a variable in mathematics, to how much someone values their loved ones, or the principles by which a person leads their lives. However, the value I am interested in is the value of investment. When does an investment offer such value that you would be mad to not to part with your money?
The teachings of value investing have been around for the best part of a century, where it was famously taught by Benjamin Graham at the Columbus Business School. However, people have been subconsciously measuring the value of something compared to the investment required for centuries before that. Today many stockbrokers all over the world pick stocks on the notion that they offer good value and are currently trading below their true market worth. Ask a professional gambler what the number one rule of successful profits is and they will say ‘always find the value’.
So where am I going with this?
Well… investing in property is no different. When a development/house/piece of land is on the market, if it is deemed good value in the eyes of the investor then no matter what the current market condition, the property is good value. Last year we sold a project in Orlando, Florida right in the heart of the US housing crisis, the development was already complete and many of the homes were renting to holiday makers keen to be close to Walt Disney World. Now understandably some investors chose not to invest in this project on the basis that they felt the housing market had further to fall there, but the point was at the time you physically couldn’t build the properties for the prices they sold at and furthermore they were built already and achieving 90% occupancy a year. For the people who have decided to purchase the investment presented them with a value opportunity in the market.
This year we will see many more opportunities like this and the key is to strike when you know you are getting a good deal. If you wait to find the elusive ‘bottom’ of the market then unfortunately the really fantastic deals will already of passed you bye. All is not well with the world economy ….but, it has presented us with the buying opportunity of a lifetime!
Written by: Christopher Chadd