Understanding Real Estate's Place in a Balanced Portfolio

Understanding Real Estate’s Place in a Balanced Portfolio

Investment is one of those things you can’t really understand until you do it. Books, conversation, mentorship, and education all help. But there’s nothing to replace allocating real resources and watching them either gain or lose value, based on on judgments you made at some time in the past. There are general rules of thumb, and lots of history to look back on, in order to make the most educated decisions possible. But in the end, you’ve got to really take a look at the investment you want to make, and decide if you think it’s right for you. Then you go for it. Then you wait.

Understanding Real Estate's Place in a Balanced Portfolio

With every kind of investment, there are nuances, things you can’t anticipate until you have a lot of experience in that arena. In the case of Real Estate investment, most investing guides will tell you that it isn’t as good a source of growth as something like the stock market. Generally speaking, this is true. With the average home in America gaining value at a rate of about 4-5% every year, this increase in your wealth typically won’t beat out the general market, where certain funds can get you at least 9% annually.

But this is where it pays to know your market. In every city in America, there are neighborhoods where properties are losing value every year, and others where the average yearly increase greatly exceeds that 4-5% benchmark. Many (including the one I’m writing from now) will exceed the 9% returns seen on good funds. It’s all about identifying these regions, buying low, and knowing when to hold and when to sell.

In many American cities like Baltimore and Detroit, which are in the midst of recoveries from decades-long economic plunges, houses and commercial properties can be had for a song. Many of these have been disused for years or more, and are in need of intensive repairs. Buy getting in on ground floor recovery regions of repopulating areas, real estate investors can double their money, or more, in a couple of years. This is all basic flipping: buying low and selling high. Because of the rapid population changes in cities, these can be the best regions to do it.

But flipping isn’t the only way. Lots of investors buy and hold these properties, after making the requisite repairs to take on tenants. In many cases, rents charged will be more than double monthly mortgage payments, meaning that these houses are paying for themselves really quickly, all the while building equity and increasing in value along with their adjoining neighborhoods. If a real estate investor isn’t in a region where this kind of cheap buying and intense growth is possible, it can pay to get to one. With smart growth principles, principled investors can do a lot of good in communities where disuse has been near total, leaving residents and businesses in severe decline, with many of the endemic problems of poverty and decay. All the while, this form of investment can be making a lot of money. Done right, with careful planning, it can far outpace more passive investment forms, like the stock market. Not everyone is willing to identify this kind of properties, and do the work to repair them. But for those that are, the rewards are great, far beating the national average real estate investment returns.

Why Use AMPI?

AMPI is the national association of real estate professionals that have, since 1956, gathered under laws and codes of ethics and conduct to create a reliable, trustworthy an efficient real estate environment in Mexico.

AMPI consists of separate autonomous sections all throughout the nation, as well as more than 4,000 associates and affiliates.

Each section is independent and has its own board of directors, only surpassed by a national board of directors comprised of twenty associates from all over the republic.

Developed over the years with the input and knowledge of its members, AMPI is much more than just a collection of offices.

AMPI has been a solid and recognized institution in Mexico for the past 27 years. It was originally established in 1956 and was consolidated in 1980.

AMPI is currently represented in all the principle cities and regions of Mexico stretching from Tijuana to Cancun.

The Riviera Nayarita, Vallarta and Compostela chapters of AMPI are dedicated to promote the best practices in real estate by providing its members with education to reinforce the standards of ethics that give our industry the credibility which our clients deserve.

AMPI is committed to giving our membership access to a multiple listing service that forms the platform from which our industry can expand locally and into other markets while giving our members precise and up to date information that is vital to continuous improvement and growth.