Reasonable returns

Tycoons, teen idols and tyrants all have a penchant for buying multiple properties. In fact, the idea of owning a collection of homes in the world's most sought after locations has long been a symbol of success, whatever field you happen to make your fortune in.

Billionaires, however, are not necessarily the most savvy property investors. If you pay US$100 million for a ranch in Aspen or US$200 million for a penthouse in London, it's unlikely your are going to see a profit, even in the long term, especially when you take account of inflation, maintenance and service costs. Such purchase decisions fall into the "emotional" category, and the benefits definitely lean towards lifestyle rather than capital gain. The success came before the houses, not the other way round.

In the last week alone, ultra high-end properties have been hitting the market around the globe with price tags that for a logical investor would seem difficult to improve upon even in a reasonable time frame. Yet for those with the cash to indulge their luxury aspirations, such upscale pied-a-terres still represent a bargain.

A penthouse in LA for US$45 million? Snap that one up. A mansion in Chelsea for US$83 million? Take two! There is little doubt these properties will sell, but the buyers are unlikely to be looking for fast returns, or indeed to make a profit at all beyond the undoubtedly indulgent lifestyle options they offer.

For those property buyers more interested in ROI, passive returns remain the most attractive option in today's turbulent market, and the variety of potential income streams for those with the cash to invest in a property they can then rent out is becoming ever more diverse.

In countries hit hard by the housing bubble in the West, for example, renting property is becoming an increasingly popular alternative to risking home purchases based on mortgages that are hard to come by and even harder to pay back.

Even in the booming East, a new generation of mobile, constantly connected professionals is increasingly looking at ways to spread its home base while travelling for work and leisure, which makes short and long term rentals a lucrative opportunity for investors with an eye for the best locations and property types.

As any savvy property investor will tell you, there's little point in becoming a paper millionaire in an economy driven by intangibles such as "investor confidence" and "market sentiment". Assets may provide some psychological security, but they also come with monthly costs. Real liberation from the daily grind comes when you create enough passive income to ease your personal financial pressure and you don't have to buy multiple properties to achieve this.

Whether its a simple buy-to-let condo in a regional business hub, a managed holiday home with guaranteed yields or shares in an international property investment fund, one or two solid income generating properties with reasonable returns can free you up to enjoy life.

Then you can finally pursue those passions you were leaving on the sidelines while you chased that illusive goal of financial freedom.

Article source: http://www.thethailandlinks.com/2013/05/31/reasonable-returns/