Buying real estate has always been the most conservative way to save money. After all, the purchased apartment is an inviolable asset, which will remain with the buyer, no matter what happens. Especially if it is insured.
Most often, real estate is invested in by people of the average age of 54, who caught the default, when all savings stored in banks were lost. These are people who lived through several crises, who are not ready for the increased risks of investing in stocks but want to keep and multiply their savings.
Real estate prices have risen sharply over the past 10 years. But low mortgage rates and a relatively small down payment on purchased real estate have fueled people’s interest in this type of investment. Now you can buy an asset with the help of mortgage funds and pay its cost to the bank from the income for the rent of the apartment.
In addition, it is now possible to invest in real estate abroad. Developers in Thailand, Georgia, Turkey, and Cyprus offer property management services after the commissioning. They rent out houses in Turkey to tourists for a small percentage, and the owner gets an income of about 6-7% per annum. Of course, this is not the highest yield, but it is paid in foreign currency. That is much more attractive to a potential investor.
If you want to not only save your savings but also multiply them, contact experts. They can help you decide whether real estate investing suits your risk-return ratio. You will determine the budget, you will understand whether it will be your own or borrowed funds. And most importantly, experts will choose your investment strategy based on how much money you need to make. Real estate agencies have all the information concerning the areas in which it is more profitable to buy an apartment, where you can sell them quickly, and which developers one should trust if the apartment is bought at the stage of the foundation stone.
At first glance, it is possible to understand all this on your own, but it will take your precious time, which could already bring you some income.
Crisis situations that crash the real estate market for a couple of years are exceptions. The great thing about investing your savings in real estate is that owning it always generates passive income in the long run. If you wait for a better price to get into an investment, you may never get there. The advantage of investing in real estate is that you can do so in any market situation.
In general, the fluctuation of price increases in the real estate market is not as large as, for example, in the stock market. The tenure of people who buy real estate for investment purposes is about three years. During that time period, the price is likely to flatten. And if the residence is built in a region with high demand and high population inflow, even if the market is weak, the price of such real estate will not fall. Due to the constant influx of new residents and limited supply, the cost will continue to grow.
Commercial real estate, until recently, was the most profitable in the market. But the coronavirus pandemic made adjustments here as well – many companies gave up offices and went online. Others have moved some staff to remote locations. Therefore, the commercial real estate market is expected to reduce demand.
In the residential real estate market, everything is stable. And the highest demand is now in two segments. The first is economy class apartments: studios or 1.2-bedroom with simple renovation. They are wanted 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 outpaces supply.
The main thing to keep in mind when investing in real estate is to choose living spaces in areas with high transport accessibility.
It is important to follow three rules:
- Choose a reliable developer;
- Buy liquid objects;
- Do not wait for a high income.
If the first and second points will help professionals in real estate, then the third point should be controlled by yourself. Investments are associated with a fast income. Therefore, there is a great temptation to get into debt to the banks, not having calculated the credit load. Often people take 3 or 4 apartments, fail to cope with the payments and sell the purchased real estate in order to pay the banks. Not only do they not receive any income, but they also lose money.
Investing in real estate is not an option for those looking for yields over 20% per annum. Even if you take into account the strong recent growth in apartment prices, over the long term it will not give the same profit as, for example, securities. But the real estate market is interesting because the investor owns a stable and tangible asset.