Investments into the real estate as this risky, though profitable sphere interest many. There are several types of the similar investments differing from each other and having the advantages and shortcomings. It is important to know rules and features of such deposits.
Whether it is favorable to invest in the real estate?
There are two options of receiving profit on this type of investment. The most popular way – property rental thanks to what it is possible to gain not only monthly income for rent, but also increase in the passive capital as annually real estate prices increase. The second option of investment – resale, and here it is possible to get profit on the transaction of sale and purchase. If interests whether it is worth investing in the real estate, then it is important to know that even the prices reduced in crisis quickly are restored and even exceed pre-crisis level.
Investments into the real estate are pluses and minuses
In any kind of investments there are risks therefore before making investments, it is important to study the existing advantages and shortcomings. Let's begin with good information, so, carry to pluses of investments into the real estate:
- Continuous increase in prices for the real estate therefore, having bought the apartment for $25 thousand, in a year it can be sold more favourably is observed.
- Income from investments in objects under construction is high, than, for example, percent from a bank deposit.
- Having the real estate, it is possible to take in bank the large credit under its pledge.
- Acquisition of an object in the secondary market has a minimum of risks as the building already is in operation.
Describing pluses and minuses of investments into the commercial real estate, and other objects, it is necessary to consider also the existing shortcomings:
- Similar investments are large, and can afford them the few.
- This option of investments includes also additional expenses, for example, on services of the realtor, lawyer, repair, utility payments and so on.
- Duration of payback can be big.
- If it is not supposed to sell the apartment or to personally use it, then investment for the sake of rental housing is unjustified.
Investment of investments into the real estate
There are several ways of investments to the real estate, so, the most popular options: purchase of residential and commercial buildings which have the advantages and shortcomings. It is possible to invest in the real estate at a construction stage thanks to what it is possible to get good profit. Besides, separate group are investments in foreign objects.
Investments into construction of the residential real estate
It is the most profitable, but at the same time a risky type of investments which can be divided into two groups:
- Deposits in habitual understanding. In this case investments into construction of the real estate are made in construction works, and after their termination the person gets profit depending on a share.
- Purchase of an object at an early stage of construction. There are companies selling apartments before they were constructed. Thanks to it they attract extra money in construction to finish works. In most cases building lasts 1-2 years and after that the price of initial investments increase by 1.5-2 times.
Investments into the real estate for construction are risky therefore it is important to study carefully legal and economic lines of the company and also its experience, reliability and responses. By drawing up and signing of contracts it is recommended to use consultation of the lawyer. Thanks to the help of experts it is possible to avoid problems in the future.
Investments into the commercial real estate
The most difficult option of investments which requires special attention. It is possible to carry to this group of the real estate: shops, warehouses, restaurants, offices and so on. For receiving profit it is used by the companies and businessmen. Before investing money in the real estate of this type, it should be taken into account that in recent years the bad price dynamics is observed therefore demand significantly falls. It causes crisis and lack of development of small and medium business.
Investments into the commercial real estate have important distinctive feature – a high threshold of an entrance to business. One more problem in this sphere concerns complexity in search of clients. It should be noted also high risks as for success it is necessary to execute many steps: to pick up the room, to make suitable repair, to attract clients and to sign the favorable contract. If to compare profit on investments in an inhabited and commercial object, then in the second option it will be more. Such investments in 8-10 years will pay off.
Investments into the residential real estate
This type of investments is based on acquisition of the room, apartment, house and other premises. This option is attractive what risks small and investments is guaranteed will pay off. Investments into the real estate market differ depending on the region. It is possible to earn in this case in two ways: commissioning of the object for rent and sale through time when cost increases. As for payback, it long as to come to net profit, 8-10 years are required.
How it is correct to invest in the real estate?
There is a certain scheme as it is correct to invest money to minimize risks.
- The assessment of investments into the real estate has to be carried out, that is it is important to define the financial opportunities. "Free" assets are worth using. You should not forget about different ways of increase in the sum, for example, capture of the credit or involvement of the co-investor.
- After that carry out studying offers in the real estate market. It is better not to hurry as the amount of dividends depends on a right choice. In a prize there are investors who understood subtleties of this sphere.
- At the next stage choose a real estate object. It is possible to pay attention to elite housing which has good liquidity. At an investment at a stage of construction it is necessary to consider that in process of emergence of floors the project cost will grow. The secondary market is not too profitable, but the living space can be bought with the minimum assets.
- Purchase is carried out and before carrying out investments into the real estate, it is necessary to address lawyers that they helped to carry out the transaction and to check quality of the contract. Previously it is worth studying tax nuances.
- After that it is possible to carry out resale or commissioning of the object to rent. There are several ways how to increase the profit at an investment to the real estate: carrying out re-planning and high-quality repair, an extension of an additional object, transformation inhabited to the non-residential premise and vice versa.
Features of investments into the real estate
Experts and skilled investors gave a number of useful tips which will help to understand features of the real estate as subject to investments:
- Analyze the real estate market in the region within several years to understand possible jumps and falling.
- The assessment of the market should be carried out only in dollars.
- Investments into the real estate have to consider also a condition of an object of investments as it is worth thinking over the approximate sum for investments in repair and that from this can be received.
- Deciding on the choice, consider proximity of finding of important objects: schools, kindergarten, shops, drugstores and so on.
- It is better to make purchase in the summer, and to sell here – in the winter.
How to invest in the real estate at the small capital?
Many consider that for purchase of the real estate the huge sums are necessary, but actually there are several ways which people with insufficient quantity of means can use.
- Fund raising. Here carry a mortgage – the credit on the security of the real estate. That to receive it, it is necessary to have a stable source of income and good credit history. In most cases the bank gives a mortgage under 11-17% per annum.
- Involvement of co-investors. Investments into the real estate in the small town or in big, can be based on search of the partner who will be ready to place a part of money for real estate revenues.
- Accession to club of investors. There are special communities where it is possible to find adherents who can help each other financially. Thanks to it it is possible not only to gain independently income, but also to provide profit to the partner.
Collective investments into the real estate
The young direction in the sphere of investment is the collective investment to inhabited and non-residential premises. It is still developed poorly, but at the same time has a number of characteristic features: investment happens under control of team and professionals that provides legal and financial support, it is possible to buy objects in equal shares to resell them with benefit, or to operate them together, getting profit according to the available share. It is favorable to invest in the real estate so to people who have no many means for independent purchase.
Investments into the foreign real estate
The attractive sphere for investments is purchase of the real estate abroad, for example, in Europe, America, Canada and on Arabian Peninsula. Investments into the real estate are abroad good the fact that the cost of objects remains stable throughout all seasons and it is not influenced by inflation. Investments into the real estate to the USA and Europe are attractive also that the cost of dollar and euro constantly rises against ruble and hryvnia. It is possible to buy the commercial real estate, and still housing for resale or leasing.
Investments into the real estate of 2018
Even during crisis the people make investments in the real estate, but in 2018 it is considered that the market will be in an unstable state. Experts specify that investments into the real estate in 2018 have to be accurate because of instability of economy. It is recommended to hold off purchase of the objects which are at a construction stage. If nevertheless decided to get the real estate, then it is better to stop on the one-room apartment as it is the most popular option in case of rent and it is simpler to sell such objects.
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