Anyone who wants to maintain the value of their assets must at some point make investments , this movement of capital is strategic and of utmost importance to maintain and increase its value. Despite the situations that may be happening in the economic environment, mobilizing capital ensures its profitability and helps its growth. A real estate investment is one of the most solid ways to achieve this profitability, since it ensures the value of the asset and a return on investment is achieved at the time of the revaluation of the property.
Why make this type of investment?
This is one of the key questions when deciding to put an investment capital in motion, to answer it we can establish some reasons:
You can start from scratch : a great advantage for any new person in the world of investments is to be able to start without having an advanced knowledge of the subject. As you enter the world of real estate investing, you can master basic concepts, as well as other aspects of real estate. Both learning the theory and putting it into practice is relatively simple. Getting to know concepts such as mortgages, performance, return on investment, rent, among others, is not limiting to find investment opportunities. What you must respect are some basic rules of the game in order to achieve a successful investment.
It offers a higher return : this is explained very easily, simply by calculating how much return an amount of money generates in a savings investment in the bank against the capital gain or profit that the same amount of investment generates by acquiring real estate (land , apartments or houses). Acquiring a property immediately turns it into an asset that, except for some major event, does not devalue and that over time only increases its value and serves as a guarantee to support your living condition or the execution of new projects.
It has greater stability than investing in the stock market : making investments with stocks, futures, raw materials, currencies, among other instruments of a stock market, offer good returns, but you have to face a very steep learning curve, an extremely fast dynamic and a volatile market, depending on the economic context of the moment. On the other hand, the greater amount of real estate under your belt, you will obtain a greater economic base and long-term security.
Additional income : the acquisition of real estate provides benefits in the long and medium term through two modalities. In the long term, the concept of surplus value is handled, in this case we are talking about the increase in the value of the property over time, in this case many factors affect the increase in the value of the property, such as the construction of other buildings of equal or greater value, shops, main roads or some other important infrastructure work or the change of use of the properties, for example, from residential to commercial. Those circumstances increase the value of the property. In the medium term, the figure of rent allows to generate a cash flow that can help with the mortgage financing of the property, the financing of new acquisitions or simply outstanding assets for your accounts.
Increase in personal assets : a real estate investment directly affects the assets, this begins to create a solid base that helps to support the credit history and the possibility of new financing. Besides, real estate investments are a solid way to prepare for the future. As a strategy for an eventual retirement, as a measure to safeguard the interests of the family or the assets of the children, this type of investment has more elements in favor than against, offering great profitability, stability and a wide variety of opportunities.
How to acquire an investment property
Once the decision to invest in real estate has been made, a large number of questions appear, the main ones would be how to get the first property? The second would be when will the investment capital return?
To answer the first question, the answer lies mainly in choosing two modalities in the real estate market. Acquire properties already built , new or already with their years; the second option is to buy when the property is still a project reflected in the plans. Both options are good, in the first it is necessary to cancel the property immediately, which may generate a mortgage debt, but the property is now ready for use. In the second option, the acquisition cost is reduced since at this level the value is always lower for all the waiting time it will take to build the property. Both cases have their advantages and disadvantages, but they are the classic ways to enter the real estate investment game.
In reference to the return on investment, two important terms come into play here, such as capital gains and cash flow thanks to the lease. In the first case, the capital gain refers to the increase in the value of the property, it implies a profit on the initial amount invested. To speak of a complete return on investment, the amount obtained by the increase in value must be greater than the amount invested. Regarding the lease flow, at the time the property is acquired it can be offered to the public to lease, either for housing or business, this lease generates a flow of money that can give the client leverage in the payment of the mortgage debt if it is possible to acquire a credit with monthly payments for an amount less than the rent. If the property was completely canceled, this flow would go directly to the return of the invested capital.
In any case, every investor should seek the advice of professionals in the real estate market to obtain information, techniques and strategies and thus get the best benefit from this type of investment. They will offer their knowledge and experience to achieve the objectives that the client has set in this world of real estate investments.