Mr. Firas Al Msaddi, CEO fäm Properties, addressed the audience questions after a recent Real Estate Investment Lecture he delivered. Here are some excerpts -
Q. Many people made money in the stock market without understanding it. So why can’t I?
Ans. Many also lost their lifetime savings. The risks are simply not worth it, especially if you are investing in stock markets before securing your tangible investment in real estate. Stock market investment is beyond your control. It often lacks tangible fundamentals or is driven by the basics that you cannot understand unless you are an expert, and it is impacted by way too many moving parts—not just the commercial foundations.
Q. Isn’t stock market a more liquid investment?
Ans. Do you want to invest so you can liquidate or do you want to invest to establish a secure source of income and pave the way for capital appreciation opportunities? It is easy to liquidate, but making a profit or a loss is out of your control. Not to mention that in drastic market positions, liquidation is not even permitted by law!
Q. Firas, you don’t understand other investment ventures, how can you even put it all in a comparison table?
Ans. It is the approach, the principle, that will lead us to conclude what is right and what is wrong for us. So, if someone knows the stock market better than real estate, surely the stock market is his first option and real estate is a diversity.
Q. Many people say that buying a home is a liability. They say it’s better to rent a house and buy passive income assets. Is it true?
Ans. There is no right and wrong here. You need to do what feels right for you.
So yes, for some, securing a permanent owned home for the family is priceless and means the world to them, while for some others, the sentimental value that comes with owning a home does not mean much to them. So you could rent a house and invest in passive income. There is no right and wrong here. You need to do what feels right for you.
Q. But prices can drop in real estate, isn’t it?
Ans. Unlike some other investments, we all know that historically, property prices keep increasing on the long-term, despite the ups and downs. Let alone that, it never goes to zero. What is better than entering into an investment that you know cannot go wrong in the long-term despite any price and market fluctuations in the short-term? It is one of the top investments that I can think of—one that provides you with a controlled level of risk.
The first rule for any investment I make is: Can I measure the risk, and more importantly, can I afford the risk of the worst-case scenario? Then I look at the upside potential of passive income and capital gain.