Real Estate Investor Magazine South Africa March 2016

AMERICA Why Invest in the United States Why Atlanta BY RJ PALANO S ingle-family houses are the easiest to understand of all real estate investments and the easiest to liquidate. Most people in the U.S live in houses so we are familiar with the care and maintenance that a home requires Atlanta is the primary transportation hub of the Southeastern United States, via highway, railroad, and air The thing about houses that makes them so attractive as an investment is they provide cash flow, appreciation and are a hedge against inflation and they also have a low barrier of entry into this marketplace. A well located investment house in the U.S typically falls into the price range of $100,00 - $200,00 USD. Relatively speaking, that’s a low price point for entry compared to commercial real estate investments. Commercial real estate investments require more sophistication, are more difficult to find, more difficult to exist and have more risk associated with them. 52 MARCH 2016 SA Real Estate Investor It’s easy to be nimble with houses and you can spread the risk gains over many houses. Not so with commercial real estate. I know from personal experience when I acquired a 24,000 square foot office building located in Western New York in 1985. It was a really nice building with underground parking elevators. I paid $975,000 for the property and sold it three years later for $840,000. The demand for offices in my building’s area was declining, as newer buildings in nicer areas were more appealing to my tenants. I realised I was in trouble with this building and decided to cut my losses before it got worse. I’ve dabbled in apartment and mixed use buildings, including offices and apartments but nothing, and I mean nothing, was as easy to buy, sell, rent and manage than single-family houses. The problem with commercial real estate is really centred on the financing and the exit plan. The biggest distinction on the exit plan of single-family houses over commercial real estate in the end user. You see, the end user can be an investment that rents it out but a homebuyer that wants to live there will pay more money for it. Homeowners buy for emotional reasons and that will always fetch a higher value in the right areas. www.reimag.co.za

Real Estate Investor Magazine South Africa March 2016 | Page 54