Today, we are faced with the question of where and how to invest free capital, so that they not only do not devalue due to inflationary processes, but also bring a stable income.
Residents of many countries buy shares of various enterprises and thus try to protect themselves, but these are quite risky investments, and for various reasons they are not popular among. But investing in real estate has proven its advantage over many years of experience. What attracts people to such activities?
High liquidity. At all times the population growth is far outstripping the ability of housing construction. This means that the demand for housing is not only consistently guaranteed, but also constantly increases, investments in real estate are justified.
Long-term profitability. Owners can rent out commercial properties, land plots, apartments and houses. The term of the contract is at least one year, and it is always possible to renew it or make a new one with the adjustment of the terms.
Availability of attachments. Developers are in high demand for investments, and they provide bonus programs to attract money at the initial stage,which makes it possible to significantly reduce the cost of a square meter of real estate. At the stage of ready-made housing, it increases by 15-20%. When selling, this difference is a net profit.
Various options for making a profit. Each investor can easily choose the best way to invest money, taking into account their number and planned use of the object.
But not everything is so perfect with real estate investments, there are also specific problems.
- The problem of investments
- Problems of investing in real estate
- Like every type of business, investing in real estate has its own challenges.
Unstable demand. This refers to the change in prices for a residential building or apartment over a period of several years. There are significant fluctuations both in the regions and in the country as a whole, and the economic situation in this period of time makes its own adjustments. But in the long term, prices always go up.
Big difference in cost between different cities. This is not a critical point for private investment in real estate – low cost automatically requires less investment at the initial stage of investment.
High utility costs and taxes. Factors are objective, they can not be avoided, they should be accepted and taken into account during the calculation of the return on investment in real estate funds.
Large players use mediation in the process of investing in real estate, turn to realtors who are professionally engaged in such business. They constantly analyze the state of the market, study objects, learn as much information as possible about developers, and can anticipate medium-term price changes. People with small funds in most cases try to save money and make their own decisions about investing in real estate. The result can be different, often depending on luck.
Types of investments
Despite the presence of certain risks, most experts consider investing in real estate to be the most stable and guaranteed income. Especially calmly feel those persons who can dispose of objects for a long time, they easly react to short-term fluctuations in the market situation. Depending on the purpose of the objects, realtors distinguish several types of real estate investments.
1. Housing (urban apartments)
Investment in residential real estate
Wages in large settlements are much higher than in rural areas, as a result – citizens are able to pay more money for buying or renting. There are two ways to make a profit from investing in such objects.
Speculative. Even at the initial stage, the investor plans to resell the apartment, the profit is received one-time due to the difference in investments at the construction stage and the final price of the finished housing. To increase the return on investment in real estate, it is necessary to pay attention to the layout of the premises, the location of housing, its technical condition. The existing infrastructure is of great importance: schools and kindergartens, shops and sports halls, public transport stops and places for recreation.
At the expense of renting. The income from investing in real estate is long, and monthly payments depend on many factors. Tenants try to choose housing as convenient as possible and at the lowest cost, this is a natural aspiration. To increase the profitability of real estate investments, you should pay attention to all minor nuances, and not only to the technical condition of the apartment. Many potential customers are interested in neighbors, the state of heating, the thickness of the walls and other architectural characteristics of the building.
Residential real estate provides an opportunity to make a profit of about 65% of the initial capital. As for rent, there are significant fluctuations depending on current prices and the commercial skills of the apartment owner.
Investment in commercial real estate
Beginners are not recommended to engage in such an investment, it is very difficult to get income without practical experience and theoretical knowledge. Money is invested in large office spaces, retail and sports halls, warehouses, production workshops, etc. The cost of commercial premises can be millions, and the payback period will stretch for decades.
Before making a final decision on investment in real estate, it is necessary to carefully study the existing legislative acts and decisions of local self-government bodies, eliminate the risks of problems with various regulatory organizations, and know the specific requirements for environmental protection for enterprises. The level of return on investment in real estate is high, but investments should be made for a long period of time.
Investing in land plots
One of the best options is to invest in long-term investments. Regardless of economic and political factors, land is always in price. Long-term ownership of the plot does not entail any material losses, it is easier to arrange it, the probability of fraud is almost eliminated.
However, before the acquisition, it is necessary to determine exactly what to do next and, taking this into account, successfully choose a plot. The plot can be sold for construction or rented out for agricultural production. The disadvantage is the frequent change of legislation, the constant tightening of requirements for the use of land. No one can guarantee that after some time the state will not nationalize the land or sell it to a new owner.
Investment in foreign real estate
A very attractive investment in real estate, but available only to a small circle. Developed European states are an ideal contribution option. In addition to guaranteed income, in some countries, the investor has a permanent residence, and eventually takes out citizenship.
How to invest with a small start-up capital
It is better to invest your own funds, only in this way you can achieve maximum profitability of real estate investments. But even those who currently have not enough money of their own can invest in real estate. There are several ways to make do with a small start-up capital.
Credit. Some banks, if they have a positive credit history, are willing to issue large loans for a long-term period. The method has two disadvantages. First – you will have to pay large interest rates, which significantly reduces the profitability of real estate investments. Second – in the event of a breach of credit obligations, losses reach large amounts, while the right of ownership is lost.
A loan from friends or relatives. The ideal option is to take the money without interest, successfully invest it in real estate investments and return it within the agreed time frame. If this condition is not met, then best friends turn into enemies, at worst-long court proceedings.
Co-investment of finances in real estate. It is necessary to attract partners with great financial opportunities, to convince them of the reliability and profitability of the investment. Disadvantage-co-founders always demand a large part of the profit, you should carefully consider the conditions of joint activity.