 Opt for One Location - Irish Business Post Aug 6, 2006 Dublin, Ireland
Campbell: Opt for one overseas location
The international property market has long mastered the act of seducing the Irish investor.
The Sunday Business Post (Ireland)
06 August 2006 By Laura Noonan
The international property market has long mastered the act of seducing the Irish investor. Where once an apartment in Alicante was the height of sophistication in international investment, Ireland’s budding property magnates now boast portfolios that span continents.
It seems no location is too remote or too distant and no market too unproven to quash the boundless enthusiasm and optimism of the Irish investor with spare euro and an obliging bank manager back home.
The traditional logic of diversification dictates that one property in three different markets leaves an investor far less vulnerable to economic maladies than three properties in one area. However, international property guru Don Campbell disagrees with the wisdom of the scattergun school of international property investment.
On a recent visit to Dublin, Campbell, who is president of Canada’s Real Estate Investment Network, said Irish investors should try to specialise in one location rather than hedging their bets. ‘‘If you study a region and become a real expert on what’s driving that market and what the economics of that market are, that’s how you build a really good portfolio,” said Campbell, who has been investing in property since 1985 and is the author of a bestselling book on the subject.
‘‘I think that if you start to buy in all these different regions, it becomes more of a roll of the dice. If you’re guessing and hoping, then putting all your eggs in the one basket is a bad thing.
‘‘But if you actually know the marketplace, it’s a different story. One of Warren Buffett’s famous quotes is: ‘Put all your eggs in one basket and then really watch that basket.’ I like that.”
Picking an area in which to invest should be an economic decision, not an emotional one, Campbell said. ‘‘People need to do their own homework. Find out are people actually moving to the area or if it’s just investors who are buying there. Talk to chambers of commerce. It’s not the pretty sunset pictures that drive a real estate market, you need to see an underlying economic strength.”
Once investors have picked their area, Campbell said they should start off with one property and build from there. ‘‘If you grow gradually you learn from your mistakes and you do it better next time,” he said. ‘‘Buy one property, figure out the local planning, the local laws, what your rental market is, then buy another, and another, as long as the market fundamentals continue to be strong. ‘‘And then when you get to your target, whatever that is, just stop buying.”
Some investors think their work is done once they’ve picked and purchased their properties, but Campbell said they couldn’t be more wrong. ‘‘You have to be proactive and pay attention,” he said.
‘‘If the economic fundamentals start to change in a region, then you should sell, and find another region. It’s not just ‘buy and pray’. It’s ‘buy and be an active investor’.”
Campbell said he generally holds properties for five to seven years before moving on and that houses and apartments are the easiest properties to sell on. ‘‘I tell every investor that you have to have an exit strategy in mind when you buy.
‘‘If you’re buying a quarter share of something or a hotel room somewhere, then the market that you’re going to sell it to is so much smaller, whereas if you buy an apartment or a house, you can sell it to a home owner.
‘‘You have to really think of how you’re getting in and how you’re getting out,” said Campbell.
Posted August 06, 2006 by Laura Noonan |
