Investing In Real Estate: How to Save And Increase
Investing in real estate has become popular again. This was led by low rates on bank deposits and an active rise in housingprices. In addition, real estate in USA has always been considered a reliable asset that will not disappear under any economic upheavals. How the process of investing in real estate is built and how profitable it is now.
Buying property has always been the most conservative way to save money. We observed how deposits in banks depreciated, the ruble depreciated against the dollar. But the purchased apartment is an unshakable asset that will remain with the buyer, no matter what happens. Especially if it's insured.
Most often, people of the older generation invest in real estate, who caught a default when all the savings stored in banks disappeared. These are people who have survived several crises, are not ready for increased risks when investing in stocks, but want to maintain and increase their savings.
Why is interest in such investments growing?
Real estate tokenization prices have risen strongly over the past 10 years. But if we compare the cost of real estate in rubles and dollars, we see that the price increase is not high. In dollars, the price of apartments remained almost the same. But low mortgage rates, a relatively small down payment on the purchased property fueled people's interest in this type of
investment. Now you can purchase an asset with mortgage funds and pay its cost to the bank from the income for renting an apartment.
In addition, now there is an opportunity to invest in real estate not only in USA but also abroad. Developers in Thailand, Georgia, Turkey and Cyprus offer property management services after commissioning. They, for a small percentage, independently rent apartments to tourists, and the owner receives an income of about 6-7% per annum. Of course, this is
not the highest yield, but it is paid in foreign currency. Which is much more attractive for a potential investor.
Can you figure it out on your own?
To come to the bank, apply for a mortgage and then rent out the purchased apartment for rent is not about investments.
If you want to not only save savings, but also increase them, contact the experts. They will help you figure out if the risk/reward ratio of investing in real estate is right for you. You will determine the budget; you will understand whether it will be your own funds or borrowed funds.
And most importantly - experts will select an investment strategy based on how much money you need to earn on this. Real estate agencies have full information about in which areas it is more profitable to buy apartments, where they can be sold faster, and which developers should be trusted if an apartment is bought at the stage of excavation.
At first glance, you can figure it out on your own, but it will take precious time, which could already bring some income.
How does price growth affect risks?
Crisis situations that bring down the real estate market for a couple of years are exceptions. A distinctive feature of investing savings in real estate is that owning it always brings passive income in the long run.
If you wait for the best price to enter the investment, then you can never wait. What is the advantage of investing in real estate is that it can be done in any situation on the market?
For example, in Moscow real estate prices increased by 24% last year. And those investors who invested earlier have already received income on their investments. If prices continue to rise, then, accordingly, an investor who buys real estate now will receive income in the future.
In general, fluctuations in price growth in the real estate market are not as large as, for example, in the stock market. The term of ownership of real estate by people who buy it for the purpose of investment is about three years.
During this time period, the price is likely to smooth out. And if housing is built in a region with high demand, where there is an influx of people, then even with a weak market, the price of such property will not fall. Due to the constant influx of new citizens and the limited supply, the cost will continue to rise.
Therefore, most often for investment, they choose real estate in the tributary regions - the Krasnodar Territory, Moscow, Kaliningrad, St. Petersburg. Where people go from all over the country.
What objects are more profitable to buy?
Commercial real estate has until recently been the most profitable on the market. But the coronavirus pandemic has made adjustments here too - many companies have abandoned offices and gone online.
Others have transferred part of the staff to remote work. Therefore, the commercial real estate market is expected to reduce demand.
Everything is stable in the residential real estate market. And the highest demand is now in two segments. The first is economy-class apartments: studios or 1.2-room apartments with a simple renovation.
They are required by young families with children or students. The second is premium-class apartments: 4.5-room luxury apartments, in good areas of the city. In these two market segments, demand even outstrips supply.
The main thing to learn when investing in real estate is to choose residential areas in areas with high transport accessibility in the tributary regions of the country.
How much to start
The minimum cost of an apartment in USA in the regions starts from one and a half million rubles. In million-plus cities, initial investments will amount to 7-10 million rubles.
You can attract credit funds purchase real estate and pay off banks from the income from renting housing. But this option only works with ready-made objects. If you take real estate at the excavation stage, then while the house is being built you will need to pay off debt obligations yourself.
How not to burn out?
It is important to adhere to three rules: choose reliable developers; buy liquid objects and not expect high income. If real estate specialists help with the first and second points, then the third one needs to be checked independently. Investments are associated with quick returns.
Therefore, there is a great temptation to get into debt obligations to banks without calculating the credit burden. Often people take 3-4 apartments, fail to cope with payments and sell the purchased property in order to pay off banks. At the same time, they not only do not receive income, but also go into the red.
Investing in real estate is not an option for those looking for returns in excess of 20% per annum. Even if we take into account the recent strong rise in prices for apartments, in the long run it will not give such a profit as, for example, securities. But the real estate market is interesting because the investor owns a stable and tangible asset.