Should you follow the money when investing in real estate?

There is a term in the investment markets “follow the money” which has made many people seriously rich especially in the stocks and shares. Is this term one which we should be looking at and appreciating with regards to the international real estate market? Is it really simply a case of following the money around the world to find the next real estate hotspot?

While it is obviously not as easy as simply following the money, there is a lot of sense behind this particular investment strategy and we will now look at the particular elements of this strategy which you need to appreciate.

Strong economies attract business

Yes, the phrase strong economies attract business is very simple, very straightforward and to all intents and purposes blatantly obvious. If we take a step back and look at the idea behind this particular strategy it actually stands up to very intense scrutiny.

Quote from PropertyForum.com : “Prior to the 2008 US mortgage crisis the vast majority of international investment was focused on North America, Europe and the Far East. However the situation has changed dramatically over the years and when you bear in mind that the price of real estate in Brazil has increased by approaching 200% since 2008, can this….”

One example which perfectly illustrates the idea of targeting strong economies occurred after the 2008 mortgage crisis which left the US, Europe and many other parts of the world in economic turmoil. However, one area of the world which appeared oblivious to the ongoing problems was Latin America which recently had its own economic meltdown, from which the likes of Brazil, Mexico and Colombia were already recovering. This seemed to be perfect timing for Latin America with strong economic growth, growing wealth amongst the population and this looked even more attractive compared to the ongoing economic turmoil in North America and Europe.

Thriving businesses attract expats

There is no doubt that the Internet has allowed more and more people to become involved in the worldwide real estate investment market and many have made some interesting and potentially lucrative investments. This is not the case for everybody, because in some ways many people now automatically assume that all of the information you require will be on the Internet and you don’t actually need to visit the area in which you are investing. Big mistake!

History tells us that new businesses will attract expat workers and skilled workers from all around the world who are perhaps the best way of advertising and promoting the region. Those who work in a particular area, for example Brazil, would feel the economic growth sweeping across the country, the changing demographics and household incomes. If they have an interest in the real estate market this would seem like a perfect basis from which to investigate a potential real estate investment.

Business friendly politics

In many ways the European Union, and perhaps to a lesser extent the US government, has not always been as business friendly as you would hope. If you compare this to countries such as Brazil, Mexico and Colombia, where economic troubles are not necessarily a distant memory, politicians in these regions have become a lot more business friendly with their policies. This in itself attracts more businesses, more international investment and further highlights the potential of regions which might otherwise possibly have fallen off the investment radar.

The truth is there needs to be a firm base for any real estate market to prosper, there needs to be strong business, strong international and domestic demand as well as a political elite who are pro-business and international investment as opposed to many governments in years gone by who ran closed market/socialist policies. As the saying goes, money will attract money and where there is significant investment, business activity and inward movement of people this will always act as a good basis from which to consider a real estate investment. Now research the next economic hotspot and check out the value in the local real estate market!