INVESTING IN REAL ESTATE. ADVANTAGES AND DISADVANTAGES
Many investors today are convinced that investing in real estate is one of the most profitable and highly efficient applications for financial assets. In this article I want to reveal all the pros and cons of investing in real estate.
BASIC ADVANTAGES OF INVESTMENT IN REAL ESTATE
If you invest in real estate, you can protect your finances from depreciation, for example, this happens during defaults. Of course, it cannot be said that investing gives one hundred percent protection against depreciation, but when compared as a percentage of losses, the percentage of real estate depreciation will be much smaller than with other types of investments.
Investing in real estate, as a form of activity, provides the broadest scale for receiving dividends. For example, if you invest money in a real estate object at the initial stage of its creation, after commissioning, it will be possible to resell the real estate profitably – one and a half to two times more. It will be a facility ready for exploitation.
And it will be possible to resell it and even more expensive – everything will be directly related to the class and type of object.
Much more risky would be to buy a property that is already ready for use and put it up for sale. This method requires a certain work experience, special knowledge. It is very easy to “burn out” here, because the risks are much higher.
Real estate can be leased and have an excellent passive income every month. And with proper vision, you can easily buy a two-room apartment and rebuild it into a living space in four rooms already, having made re-planning.
For example, each room can be made fully functional, including a “kitchen block” and a bathroom. Then each room can be rented separately – as a hotel room. And so the rent of real estate will bring in two to three times more income than just the traditional rent of the entire apartment per month.
Another good way to make great money on real estate – is to buy rooms in the “communal” and then put them out. Few people use this method today among investors – surprisingly, but for the money it is very profitable than buying a whole apartment for several rooms.
Rooms in the “communal” in terms of investment and investment return – it is very profitable.
Under suitable circumstances, you can, indeed, have huge profits from real estate. Other investment options for individuals are either very low-income, such as, for example, with a deposit in banks, or are associated with enormous risks for which not everyone decides to go.
Today, even a toolkit with a medium degree of danger causes fears and fears to people, because everyone wants a lot and at once, and without a risk to get a big reward.
Investments in real estate from an investor are easy investments where high qualifications in the field of investments are not needed. Of course, the nuances should be pre-disassembled, so that everything is as safe as possible. But a completely different level of requirements for knowledge and experience for a person who works in the stock market.
MAJOR RISKS OF INVESTMENT IN REAL ESTATE
Today, the world is extremely unstable price stands for real estate. In many countries, it is not reasonably increased, so experts predict a decline in prices. In some countries there is a steady rise in prices of the economy and real estate, respectively. Thus, investing in real estate in such countries the risks of losing money are minimal.
In a difficult economic situation, which some CIS countries are now in, it is also very difficult to quickly and for a long time find a reliable buyer, moreover, a solvent one. Let us, as an example, consider the situation when an investor is engaged in investing money in a real estate object, the level of which, relatively speaking, is the “pit”.
In this case there is a big risk that the profits will come with big delays.And this can happen for a whole range of factors that are far from always related to the developers themselves. Remember that every developer is in close conjunction with government agencies.
That is why renting a house is often characterized not by the speed of its building – today, modern technologies can build houses of any type rather quickly, and the need to solve various problems with government institutions takes much more time. In many CIS countries, the problem with the state apparatus is almost unsolvable.
That is, financing “at the level of the pit” is the most risky, and at the same time, they are the most profitable, in fact, investments. By investing money in a property under construction only, it is impossible to achieve one hundred percent security But you can try to reduce the risks to a minimum.
If you plan to rent an apartment, then you should buy it closer to the metro, in a place with well-developed infrastructure. And the rent of such an apartment will be much higher.
It is important to pay attention to developers – this issue requires special attention. Developers experience should be carefully studied. You should definitely be interested in advance about whether he once had to break the terms for the commissioning of real estate objects.
Does the developer have this kind of negative experience? If it is available, then it is worth explaining the reason why this situation arose. It is also worth finding out how long the developer company has been working on commerce. The developer will also benefit if he has his own contracting organizations and production facilities.
When buying an apartment, you should always carefully read the contract, where all the conditions for the purchase of private property are stated. Best of all, if it is an equity agreement. Then in such a document will be written out fines for disrupting the terms on the delivery of real estate and to the maximum protected the rights of investors from the secondary apartment resale.
If you honestly can admit to yourself that you do not have the necessary information in this field of knowledge, then it would not be superfluous to get preliminary advice from a lawyer and an investment specialist. You should not spare money for a lawyer – such expenses are always justified and allow you to save a lot more money than legal advice takes.
One of the most important signs of a developer’s “reliability” is a chance to get a mortgage loan from an apartment banking system for apartments in new buildings. Banking organizations do not cooperate with unverified organizations. Bank trust says a lot.
If you find out that the developer has recently bought land as a property, and plans to build real estate on it, then this will be a good argument to cooperate with such a developer. And in this scenario, developers will be extremely profitable to real estate under construction was handed over as soon as possible.
Then the money will be released for the construction of the next object, under which the land has already been acquired.
But investing money in an obviously expensive object is stupid. This is an ill-conceived affair. If you urgently need to withdraw money, then in a short time – it will be extremely difficult to do. There is no need to risk and expose yourself to unnecessary hassle out of the blue.
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