ASPIRE TO BE A PROPERTY OWNER
Dr. Mohanad Alwadiya
CEO at Harbor Real Estate, Presenter on Dubai TV, Sr. Instructor at Dubai Real Estate Institute, Licensed Influencer
Among the most fundamental (and practical) dreams people share in common is the dream of owning a home. But why is it that not everyone succeeds in this endeavor? Economics, of course, plays a significant role in the overall scheme of things. So, given the opportunity to purchase a property, or your home, no less, would you not hold on tightly and make sure you own (pun intended) it?
I have always held a view that owning a property is essential to underpinning the accumulation of wealth and building net worth. Obviously, the accumulation of the property asset itself must be done judiciously and with a high level of diligence and care. But in my experience, the vast majority of people who have taken the step towards property ownership have benefitted significantly.
The essential question to ask is “How do I use my money to increase my wealth instead of the wealth of my landlord?”
Buying your home is a positive step towards establishing your financial security by building your equity or “net worth”. Conversely, paying rent actually detracts from your ability to build net worth because not only you are paying out money for no financial gain, but you are at the mercy of rental inflation as well. This is a problem because you are constantly being asked to pay more while your salary increases are lagging behind effectively eroding your ability to build wealth. By owning your home, inflation is working in your favor because in all likelihood your property is increasing in value and if kept for several years, you will enjoy an inflation-driven compounding effect on its value. This allows you to build your individual net worth through the capital appreciation of your property – something that is very important for your financial future.
The fundamentals of buying real estate in Dubai are no different from that elsewhere in the world. As an expat in a new country, you may be even more anxious regarding the decision to buy.
First of all, you need to be very clear as to why you are investing in real estate. Whether it’s to provide the family with a home, generate a steady stream of income or build equity for the future, make sure you are very clear about what your expectations are and quantify them wherever possible. Plan for the long-term as the industry is cyclical, yet very rewarding if you ride out one or two cycles.
You also need to ensure that you know what you can afford. If you have the cash to pay for the property that you really want, I suggest you pay for it outright; however, don’t be afraid to take out a mortgage and make the purchase as at least your repayments are building equity, not being lost forever on rent.
Then it’s a case of finding the right property. I suggest you contact a reputable real estate brokerage to assist you in doing this, but make sure that you conduct your own research as well. It’s a big decision you are making, and you need to make sure you take the responsibility and are fully aware of what you are doing.
As always, stick to the basics. Think carefully about location, building quality, developer reputation, completion status and quality of infrastructure and building amenities. Properties that are close to the beach (especially with a sea view), a golf course view or part of an iconic development is a good place to start. If you can have close access to the Dubai Metro, it’s even better. These locations are more likely to provide superior appreciation in capital value, as you will be able to ride out cyclical volatility with less distress.
You also need to consider the effectiveness of the owners association, service charges and the quality of maintenance services. Facility management is becoming increasingly more important to determining the value of buildings, and it will have an effect on the long-term value of your investment.
Finally, think clearly and rationally. If you cannot find a property immediately that will satisfy your requirements and objectives, do not settle for less, regardless of what’s happening in the market.
This article is written by Mohanad Alwadiya, the CEO of Harbor Real Estate (the most awarded property management firm in the Middle East) and senior instructor at the Dubai Real Estate Institute, the training, and certification arm of Dubai Land Department and author of the best-selling real estate book in the Middle East titled “Landlording, from renting to financial freedom”
I talk a lot. To a lot of people. Connecting people with other people, companies & markets. Real Estate - Israel - Podcasting - Construction Tech
4 年Very good points #thanksforsharing