Todays investors need to be cautious

Whether a person is investing directly into the property market, investing through funds or investing in real estate companies, the current day and age of property investment requires caution. Gone are the days of putting money almost anywhere and seeing it grow dramatically. Now, simplicity has been replaced by complexity in property and one wrong move can determine your whole investment future.

The global credit crunch has many would be property investors treading lightly. While there are still several markets that present opportunities for good returns, caution is needed. Some have felt as long as they are buying into property funds that the investment is safer than buying property outright. While the initial investment may be lower, there is still a risk. Some property developers are finding it necessary to drastically reduce property prices in order to sell, driving profits down.

Taking ownership of property in an overseas market can still be profitable, but because a market’s success is largely determined by the government, it just isn't a simple matter of buying property where demand outpaces supply. Unless the government in the target market is working to make the economy grow, the investment could fail to materialize. Countries with emerging tourism markets will prove profitable over the long run as long as the government is working to improve the infrastructure and tourism industry. Investors looking to enter a specific market will need to research and determine how the property will fit into an investment strategy. Each property market will have 3 different outlooks. The short, medium and long term viability of the market will show just how long it will take before a property begins to show a profit.

Property investment that is volatile and can potentially provide better returns in a waning global market are property funds. A global realty fund is usually managed by a banking entity and invests in several markets. While some funds invest directly in properties, many do not. This allows flexibility as the money is put into real estate trusts and real estate operating companies. What property funds do best is diversification. By investing in a number of companies, the property fund is exposed to several different strategies.