Real Estate Investments

Real Estate Investments
The housing problem has always been acute. Therefore, purchasing your own separate property was perceived as the main goal and one of the best ways to invest money. After all, an apartment is safe. But is this really so?
We have discussed in detail how profitable it is to invest in the purchase of real estate in our time, who is suitable for this type of investment, and where to start for a novice investor. So, first things first.
Real estate investing - pros and cons
As a rule, apartments are purchased to improve the family's living conditions. For example, moving away from your parents or having the opportunity to have another child. But for some buyers, real estate is also a way to make a profit.
On the one hand, investing in real estate can be very successful. For example, to protect accumulated capital from inflation or make a profit from rent. But the “rules of the game” are not the same and can vary greatly depending on the type of property, market and even region.
Before investing money in a purchase, you should carefully weigh the situation and assess the risks of such an investment. Let's look at the advantages and disadvantages of investments in broad strokes, and then move on to special cases.
PROS
As a rule, real estate is always (or almost always) liquid
Property can be rented out for profit
Buying real estate has become more accessible thanks to loans and mortgages
Large selection of objects for various purposes and in different price categories
Cons
Demand for real estate and prices can vary significantly under the influence of external factors. For example, the economic or epidemiological situation in the region
The smaller the city, the lower the demand for real estate
Additional expenses are needed for property maintenance - repairs, taxes, utilities
Force majeure, from which real estate may suffer greatly. For example, fire or flood
Objects for investment
Now let's look at how specifically you can invest in real estate. For simplicity, we will arrange investment options from the most popular and attractive to the least popular.
1 New buildings for rent
A private type of investment in residential real estate and the first thing that comes to mind when we talk about profitable investments in the construction sector. Many investors choose to purchase residential premises, since this option is less risky. You can make money buying real estate relatively quickly.
Option 1. Buying an apartment in a new building with subsequent resale
Option 2. Renting an apartment
With the first option everything is more or less clear. Let's say you purchase a $1 million apartment in the early stages of construction. Once the house is completed, its value will rise and you will be able to resell it for more.
The second option will also bear fruit, but more slowly. It is most convenient to purchase a renovated property from a developer - you will be able to rent out such a property earlier. It is also worth paying attention to the liquidity of the apartment and its attractiveness for tenants. Consider the infrastructure near the house, transport accessibility, layout, view from the windows, floor and even the standard of living of the neighbors. These factors ultimately determine the cost of rent, and, accordingly, the return on investment.
2 Commercial real estate
Here everything is a little more complicated, but also quite profitable. Firstly, the purchase of commercial real estate is more difficult to legally formalize. Secondly, when choosing a commercial property, you need to pay attention to a large number of points and criteria that are not important for investing in a residential property. Thirdly, non-residential real estate must be properly registered.
You can make a profit from purchasing commercial real estate by renting it out to various companies or individual entrepreneurs. But you may not be able to recoup your investment quickly. As a rule, its cost is quite high.
3 Country real estate
It is inferior to apartments and non-residential premises, but has recently been gaining popularity. Just like in a city apartment, you can live in a country house. Or you can buy a plot and build a holiday home. And the house can be rented out all year round, for the summer, on holidays or weekends. The main thing is that the object is located in an area with good infrastructure, not far from a large city and is equipped with all amenities. A bathhouse, a summer terrace and a swimming pool will be advantages for both short-term and long-term rental.
It is also profitable to invest in buying a house at the construction stage in order to complete the work and make a profit from the sale of finished housing. Or buy just the land and build a house yourself. There are special banking programs that allow you to get a mortgage for construction at a favorable interest rate.
4 Mortgage bonds
A relatively new type of long-term investment. Mortgage bonds are securities. They are issued by banks, and ordinary people can purchase them. Securing the fulfillment of obligations under bonds is ultimately a pledge of rights of claim to receive monthly mortgage payments from bank clients. The yield on mortgage-backed securities is generally higher than on regular bank deposits.
The principle of operation of mortgage bonds is quite simple. Let's give an example. A borrower takes out a mortgage loan from a bank for $1 million. After which the credit institution issues securities - mortgage bonds - for the same amount. Next, they are sent to auction, where they can be purchased. The bank receives money from the sale of bonds and can use it to issue new loans. And the investor receives long-term income from securities.
Invest at least 75% of assets in real estate
Receive at least 75% of profit from rental property
90% of profits are paid to investors in the form of dividends
At the same time, nothing is required from the investors themselves. It is enough to buy shares on the REIT on the stock exchange - the management company will take care of the rest. Trusts invest in various properties and rent them out. These can be apartment buildings, shopping centers, hospitals or offices. There may be dozens of different buildings within a single trust.
REIT investors receive most of their income from dividend payments, but income can also be obtained when the value of the securities themselves increases.
Beware of scams
Money always attracts scammers, big money attracts very cunning scammers. Therefore, it is necessary to carefully consider the issues of investing finances, no matter what type of investment you choose.
When buying or selling real estate, it is advisable to seek help from a good lawyer - he will help with paperwork and take into account all the nuances
When renting out real estate, carefully select tenants, write down all the conditions in the contract and monitor its implementation
Investing in securities is easier - just use the investment application of a reliable bank
conclusions
1 Investing in real estate is a profitable investment. Apartment prices tend to rise.
2 You can always use the purchased apartment, house or commercial premises yourself.
3 Renting residential and non-residential real estate is a long-term investment. Having bought an apartment once, you can rent it out for many years.
4 Investments in real estate virtually eliminate the complete loss of invested money.
5 At the same time, you need to understand that you should not expect instant profit. As a rule, investments pay off in several years.
6 You shouldn’t expect quick money in the securities market either. These are long-term investments for the future. But in the future they are almost 100% likely to bring good profits.