real estate

Real Estate comes with investing our savings, who have not thought of buying a house? Living off the rent?… After all, investments are something relatively safe and profitable. At least that was the paradigm until a few years ago. Today we have realized, due to a crisis, that the risk it has is somewhat higher than we thought. The point is that, as in any investment, knowledge of it is fundamental, hence we must know How to Invest in Real Estate

In shares and securities, we want to make clear the different options we have in Real Estate Investment and how to avoid or reduce risks taking into account certain factors. That is, how to optimize the chances of success.

How to Invest in Real Estate:

There are different ways to obtain profitability from the Real Estate Market :

  • Buy a property for its subsequent sale.
  • Buy a property for rent.
  • Buy land for later construction.
  • Buy land for later sale.
  • Real Estate Investment Funds.
  • As well as the combination of some of the above.

Objectives and term

To know How to Invest in Real Estate, as in investments of all kinds, the first aspect which we must consider is the objective and the term or timing of the investment. Which entails, of course, the risk that you are willing to assume:

If we want a quick return or a constant flow of money.

Buying a house and doing some reform to revalue it or simply waiting to have a buyer willing to pay more than what we did is a classic option. This activity can be done in a group and thus reduce our risk, even if we have a smaller part of the cake. An example of this type of activity can be found in Housers :

Another way to obtain profitability in the brick market is to rent our property, normally it is an option that will give us some peace of mind, since many times we can even pay the mortgage with what they give us as a monthly payment.

Building on land is of course the most profitable of all when investing in real estate, the big drawback is the ability of each to manage work or the availability of land that is worthwhile, by location or price.

The added value of land varies a lot depending on the infrastructure that is around it, since a home or premises can always be modified to revalue them, in the case of land this option does not exist, so if what we want is to get profitability from a land due to a future revaluation, we must be patient and consider longer periods of time.

We must warn that in our opinion they are too optimistic and although the real estate market has had strong declines, it is possible that it could suffer even more, especially with the imminent recession that seems to be about to arrive when we have not even been able to leave off the 2009 crisis.

Learn from the past

If we want to know How to Invest in Real Estate and embark on Real Estate Investment, we must know the area in which the property or land is located, with the price evolution of recent years, the proposals and projects that the city council has on duty to that area, a good form of financing and above all financial capacity to bear the cost of the mortgage in the worst possible scenario.

We have had a great problem, by all known, in this regard. We got into so much debt in past years with the approval of the banks’ risk departments that when difficulties have come, there has been no way to deal with payments and debts. Beware of abusive interests or fantasizing about future salaries, you have what you have, and with that, you must count, not a dollar more.

The Real Estate Investing Process

1. Objective:

Make money, that is clear, but the time is the important thing. If we want a constant income or a punctual income. We will choose to buy to rent or buy to sell. We can take the middle road with rent to own option.

2. Own capabilities:

This is where the skills of each one come in, if the arrangements are good for me, the option to buy, fix, and sell or rent will be more or less viable. Homes in need of repairs are usually well priced, with the downside that we will have to invest capital and time in a set-up. The good thing is that we will get more money from you with a little effort, and more if we are the ones who fix what is needed.

3. Capital:

Knowing how much money we have is easy, the difficult thing is having the capital.

If we are going to get mortgaged we must be careful with “floor” type clauses, change of interest from fixed to variable or multi-currency mortgages (multi-currency mortgages were a boom years ago, later, like any bargain in the investment world, it was ruinous and borderline the scam for those who used it).

4. Property decision:

It is important to look for areas in which the investment is profitable, it seems obvious, but it is not so obvious when there have been promotions sold in remote places and that now their owners cannot get rid of them, knowing the liquidity of the market and the area is essential.

There are web pages in which the evolution of the price is registered and thus be able to choose property consistently. They cannot ignore the characteristics of the area, public transport, schools, shopping centers …

These simple steps will help us a lot in being able to get a good return on our money. Like any investment, it has its risks, but by doing what we must, we can mitigate them and not get into situations that if necessary we cannot bear.