Investments in real estate. How to start investing in real estate without money The right investments in real estate
- Investment prospects
- How to become an investor?
- Is it worth investing?
In times of crisis, you can often hear advice from experts who suggest saving your savings by investing in real estate. Why are investments in housing so profitable and what is the best way to implement them?
Investment prospects
Is it true that real estate is called such an attractive investment opportunity? The fact is that investing in real estate means investing in reliable objects. Real estate, unlike currency, cannot depreciate, it is least dependent on market trends and, most importantly, is always in demand. Real estate is almost impossible to steal, it cannot deteriorate or be destroyed. This is the most reliable asset, and if you invest in it, you almost always end up winning.
If you invest correctly, you will receive a profit from your investment. Finding properties in Moscow or any other large city that are in high demand and rising in price is not so difficult, so your investments bring a constant income. During the crisis, investing has become even more attractive. The depreciation of the ruble pushed people to buy housing. In the worst case scenario, apartments on the market can fall in price by 5-10% per year, and even in this case they still remain a profitable asset, because the crisis passes and prices begin to rise again. And if you make the investment correctly, you will not lose a penny, but will only increase your savings.
Now you can often hear that real estate is becoming cheaper throughout Russia and even in Moscow, but just think about it - apartments are falling in price by 5% per year and this is already becoming a cause for concern, while the currency can depreciate by 100%. Of course, there is no ideal asset, but real estate is in any case safer than money, and under favorable circumstances, investing in an apartment in Moscow definitely brings only profit.
Investing in real estate is always relevant. Because the roof is given by the head, every person without exception needs it. This is exactly what Yuri Medushenko talks about
How to become an investor?
In order to profitably invest money in real estate, you must have initial capital and a clear plan for earning money on the chosen property. The easiest option is to buy an apartment in Moscow at the initial stage of building a house, concluding an agreement for shared participation in the construction. The point of such an investment is that you purchase housing immediately after the construction of the building begins, that is, at the foundation pit stage. At this moment, the developer needs funds to implement the project, so if you dare to entrust your money to the company, you will be able to purchase apartments at an extremely favorable price.
This type of investment is associated with certain risks, because if the developer turns out to be a fraudulent company, then after collecting money for the apartments, the company can stop construction and declare itself bankrupt. To prevent this from happening, you should invest in building houses in large, well-known residential projects in the market. Study the history of the developer, how many projects he has successfully completed, and only then trust him with your money.
If you invest in housing under a shared-equity agreement, then the main risks associated with construction are borne by the developer. If the construction company is reliable, then even in unfavorable market conditions the house will be successfully completed and you will receive the apartment you paid for. After completion of construction, you can either sell the housing, which will already be 20-30% more expensive, or rent it out. By the way, in Moscow, one of the most profitable options will be to rent out the property; for this you will only need to carry out basic cosmetic repairs in the apartment and purchase the furniture and equipment necessary for the tenants to live.
Investing in the classical sense
If you buy an apartment under a shared agreement and sell it after some time, this is not considered a real investment in the classical sense, it is simply a profitable investment of money. A real investment that can bring huge profits is investing in the construction project itself. That is, you entrust a construction company with a certain amount and in return receive part of the rights to own the project - the higher the investment amount, the greater the percentage of your profit.
By truly investing, you can invest money at any stage of building a house, even before it begins. However, investing has its pros and cons - among the advantages is the opportunity to make a large profit from the sale of apartments. The greater the income of the entire project, the higher your share. Among the disadvantages are certain risks, which you fully share with the development company. If, for example, there is a sudden crisis in the market and housing sells poorly or falls sharply in price, then your investment may turn out to be unprofitable.
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Is it worth investing?
Every potential investor must find the answer to this question. You can earn serious income from real estate investments, but to do this you need to invest money in the right projects that are potentially profitable. Of course, this requires active study and constant analysis of the market situation. If you are confident in the project and know that apartments in it are in high demand, then it is definitely worth investing. However, if you are not yet sure of your choice, then it is better to consult with specialists and postpone the deal.
Investing in real estate is a serious investment that should be done wisely and correctly. But you can be sure that if you become a successful investor, you will be able not only to successfully invest in the most reliable and promising asset on the market, but also to actively increase your money, because many segments of the real estate market today are actively becoming more expensive, especially in such large cities as Moscow. You can become a classic investor and invest money in direct construction, or you can simply buy an apartment in an attractive project at the initial stage for subsequent resale of the property.
Even those who stay in one place once every six months, and then only for a couple of weeks, dream of their own home. A cozy “nest” where you return after long trips and shelter from any “bad weather”. Real estate is the only asset that every person invests in (or strives to invest in). In this article, see common and exotic ways to invest money in housing, offices and land. Also note how to select each of the assets.
Real estate investment: traditional and innovative approaches
Investing in real estate does not necessarily mean buying an apartment and living in it, or selling it on occasion. Although this method is also possible. See traditional and not so traditional methods of making money on houses and apartments.
- Buy an apartment in a new building and sell it after renovation. Another option is to rent out your home. The most traditional way, which does not require much time, but requires capital.
- Buy real estate on the seashore, near mountains or other natural attractions. A very profitable tourism business that requires serious start-up capital. After all, tourists will pay more for an apartment with a better renovation. Better yet, build a cottage and rent out several rooms to different families. Ideally, each room is equipped with a separate bathroom and kitchen. Also keep in mind that in some regions profits will be seasonal. For year-round income, mountains or real estate by the sea in a warm climate are more suitable.
- Buy the ground floors of new buildings for offices. To monetize such an asset, a convenient office location is important. Below are the main requirements for choosing an office location.
- Invest money in a real estate fund. To become a shareholder of such a fund, you need to buy a certificate. Denominations vary: from $100 and above. After the construction of the facility, the fund will buy the certificates back, but at a higher price. Details are described below. For the same purposes, you can organize a fund that finances not the construction, but the repair of objects for the purpose of further sale or rental. This is the most budget-friendly, but no less profitable and risky way to make money on real estate.
- Purchase commercial properties - garages, warehouses, industrial premises for rent. As a rule, such buildings are located in industrial zones of cities. They are in demand no less than housing.
- Buy property abroad for rent. This method requires considerable investment. However, not always as large as housing in your country's capital. See prices and features below.
- Invest in land in your country or abroad. This could become a “gold mine”. In small settlements, land is very cheap. If you choose the location well, you can earn an amount several times greater than the investment. Another way is to buy inexpensive land on the outskirts of the city. Typically, cities expand over time. And what was a suburb five years ago is now a very attractive residential area. If you manage to buy a plot near a residential area, the cheapest option is to organize a parking lot there. Take a closer look at the land, this is one of the win-win sources of profit.
Domestic real estate funds
Let us take a special look at investment funds. The amount you need to have starts at $100.
The bank or construction company that founded the fund issues certificates and manages the attracted capital - decides where to invest it. Investors buy these certificates, their number determines the ownership percentage in the fund. The fund manager rents or buys land, enters into an agreement with the developer and finances the construction of a new facility at the expense of shareholders.
In 2-4 years, and sometimes the period is up to 9 years, construction will end. The house will be put into operation, the apartments will be sold, and the proceeds will be divided between shareholders proportionally, redeeming the certificates. Thus, the investor will receive back his funds and the profit on them. The fund's organizers receive a commission from the sale and redemption of certificates.
Quite a risky undertaking. After all, the chance that the developer will go bankrupt is high, especially during periods of crisis. Unfortunately, in this case there are simply no guarantees of return.
Mutual funds abroad
Abroad, these funds are called Real Estate Investment Trust (REIT). There are much wider guarantees. All funds of such a fund are invested in real estate in different countries. This offsets the losses of one market with the profits of another.
Compared to domestic funds, the profitability of REITs is not so high - only 5-7%. But the return guarantee is much higher. The minimum investment amount in a foreign mutual fund is 1-3 thousand dollars, which is also more than in domestic ones.
How to choose property for investment
The price of an apartment, commercial property or land depends on the area in which it is located today and its value in the future. Let's take a closer look at what the most attractive investment in an apartment, office and land looks like.
How to choose an apartment and house
Consider the following factors when choosing housing.
- Distance of the area from the center
- Proximity to attractions or natural resources - sea, mountains, etc.
- View from the window. Even if both apartments are located by the sea, their prices will differ if one of them has windows overlooking the sea, while the other has windows facing a cramped courtyard with people without a fixed place of residence and trash cans.
- Transport interchange. The better it is, the better the investment. Another option is that the authorities plan to build a metro line, tram or trolleybus line there in the near future. However, be prepared that you can also wait three years for such a “promise”.
- Parking, playgrounds, proximity to schools, kindergartens, hospitals, large shopping centers, restaurants and other buildings that make your stay comfortable and safe. All these factors influence the price of an apartment or house even more than the distance from the center.
- The condition of the walls, communications, roof, ventilation, and the “age” of the house are nuances that add financial weight to the property. Concierges and security at the entrance or in the “private sector” also directly affect the price of rent and the housing itself.
- The cost of the area itself. Megacities and just big cities are divided into prosperous and not so prosperous areas. The “fame” of the microdistrict affects the price of the apartment.
How to choose land for investment
At one time, American entrepreneur Ray Kroc bought the land on which the world-famous chain of fast food restaurants was located. This “trick” made him the owner and founder of the McDonald’s corporation, taking away all rights from the authors of the idea, the McDonald brothers. Don't neglect the opportunity to buy land. Moreover, in the ex-CIS countries the market is spontaneous, and you can buy land that will bring millions in ten years for almost nothing. Here's how to choose the sweet spot.
Pay attention to such questions. Is the land far from the capital or big city? Are there any natural attractions nearby? Don't neglect areas on the outskirts of cities. What was an outback yesterday will become an attractive suburban area in five years. Also, an abandoned plot in a small private sector, where there is the possibility of building high-rise buildings, can become a “gold mine”. Land there is cheap, and later you can get an apartment in a new building in exchange for permission to build a high-rise building on your territory.
A striking example of “land transformation” is the Ukrainian resort of Bukovel. The village of Polyanitsa, where it is located, is today the richest in the country. The price of plots there sometimes reaches 10 thousand dollars per hundred square meters. And before the construction of the resort, the villagers unknowingly sold plots there for several hundred dollars.
Real estate investment: what to consider when buying offices
- Transport interchange - as a rule, tenants choose places where several public transport lines connect.
- Availability of cafes and restaurants, grocery stores nearby. This is also a nuance that will allow you to charge more expensive rent.
- Parking is a convenience and your advantage at the same time.
- Security - install an alarm system in your office, this will allow you to increase the cost of your office.
Benefits of investing in real estate
Why should you invest in real estate? Let us outline the main advantages of this method of investing.
- Fast payback. Having bought an apartment or commercial property and made repairs there, you can rent it out and quickly return all costs. After all, rent is becoming more expensive every day.
- The profit from rent is much higher than if you put this money on.
- Real estate and land are always becoming more expensive. Moreover, both the cost itself and the rent. During periods of crisis, it can become cheaper for a short time, but then returns to its place again. By the way, a crisis is an ideal time to buy real estate.
- Money invested in repairs increases the cost of real estate many times over. Keep this in mind and repair your purchases whenever possible.
Risks of investing in an apartment or office
- Long procces. Therefore, to make quick money, this is not the best way to invest money.
- They require impressive starting capital, unless we are talking about real estate investment funds.
- Weak protection against natural disasters and force majeure - revolutions, wars, etc.
- Taxation - taxes on rent, apartment (if you have several), land. All this must be paid for regardless of whether you use it or not.
- Low liquidity - quickly selling an apartment at a market price is not always easy. Therefore, do not expect to quickly convert the required amount.
- The cost of maintenance is utilities. However, if you rent out housing, the tenant pays for it.
Where to buy property abroad
The company that compiles the largest catalog of foreign real estate, Tranio (data and graphs from the real estate broker’s website), analyzed what happened to real estate prices from 2008 to 2016 in Europe. In this way, the most attractive countries for investment have been identified. Let's consider investing abroad, taking into account two goals pursued by the investor.
Short-term earnings
If you consider a short-term option for investing money, you need to invest in markets that are at the stage of development.
How to invest. You need to buy housing at the construction stage or ready-made. Then renovate and sell in a couple of years when the price rises. The most attractive cities are Bucharest, Madrid, Barcelona, Sofia, Dublin, Bratislava, Lisbon, Warsaw. From this list, Spanish Madrid and Barcelona are the most promising, but expensive. Here real estate is actively becoming more expensive.
Sofia is a more budget option. The cost per square meter in the city starts from 400 euros.
Long-term capital preservation
If you are looking for where to invest your money to protect it from inflation and other economic influences, choose housing in stable markets and rent it out. The cost per square meter here starts from 3 thousand euros, but thanks to rent you will quickly get your money back. The most promising cities from the point of view of long-term investments, where real estate prices rose or fell slightly, are Berlin, London, Vienna, Stockholm, Helsinki, Luxembourg.
The fastest growing real estate market was Berlin. But it is also the most expensive from the Tranio list.
Strong walls and “ground under your feet” are a profitable and varied way to invest money. Choose your option and earn billions from real estate investments.
A modern person, having a certain amount of money, sooner or later wonders about how to invest funds and receive benefits from it. In the 21st century, a popular type of investment is investing in different types of property. Using the site, we will consider whether it is worth investing in real estate.
What is real estate and investment?
Before starting such a serious study, you must first clearly understand what is at stake.
Real estate- this is property, a land plot and everything associated with it, or a water body firmly connected to the land, which cannot be moved or it will cause great damage. It is confirmed by law in the form of documents required for a certain type of property. Real estate is the most profitable asset for investment.
Investments– a type of investment of funds in the creation or development of one’s own or third-party production with the aim of obtaining benefit, benefit or profit in the final result.
Real estate investment is investing in real estate that has already been built or is under construction to make a profit.
We have examined the basic concepts, and the question clearly arises before you: is it worth investing your savings in real estate? After all, the situation in our country is very unstable, changes are constantly taking place in the market, the price level is subject to both a sharp jump and an equally sharp drop. All the questions and doubts you have are quite natural.
We will consider all possible types of such investments. We will definitely indicate to you all the possible risks that you are likely to encounter with certain financing of funds, all the pros and cons of such an investment, and summarize the results.
Types of real estate investments
The object of investing your money can be either housing or land, or office space or shopping centers. We will look at the 5 main types of investments and all the possible nuances that you may encounter.
After familiarizing yourself with all the options, you will be able to answer your question “how to properly invest your existing financial opportunities in real estate?”
Purchasing residential premises
Purchasing residential premises is now enjoying great interest from investors. Having bought, say, an apartment in a new building, it becomes possible to rent it out and make a profit from it. Or, having bought a home with a mortgage, pay it off throughout the entire loan period from the rented money received.
Despite the fact that this method of generating profit or benefit is quite accessible in our time and has fewer risks, there are a number of nuances when choosing a residential premises:
- It is necessary to select an area and study the market to determine the cost of rent;
- It is important to choose places where there are shops, pharmacies, markets and shopping centers or hypermarkets within close proximity;
- Soberly assess the current condition of the home, and, if necessary, make redevelopment, major repairs or cosmetic repairs;
- The view from the window is no less important;
- Making your home feel cozy and having the right furniture will have a significant impact on the demand of your home.
Having thought everything through correctly, you can get a good profit from renting out or the ability to pay off a mortgage loan using the rented funds received.
Important! You must understand that renting out housing involves not only making a profit, but also periodically investing money in the form of cosmetic repairs or changing pieces of furniture. Therefore, you should not spend a lot of money on repairs and furniture, the main thing is to just choose everything well and combine it with taste.
Real estate under construction – is it worth investing in?
Buying an apartment in a building under construction can bring more income than buying a finished new home. The difference is that apartments in a building at the construction stage cost significantly less than ready-made ones. In this regard, after purchasing such a home, after some time you can sell it for much more and make a tangible profit.
Despite such an important advantage as receiving significant income, there are some risks:
- Construction deadlines may be delayed;
- Stopping construction;
- Bankruptcy of the developer is also not excluded;
- Demolition of a building that has begun due to the developer’s lack of the necessary set of documentation or the legality of the entire construction.
All potential risks usually occur through the fault of the developer. Before investing in a very inexpensive apartment in a building under construction, you need to spend time and find out in detail the reputation of the developer. It is also necessary to find out how long the developer’s company has been in the market, how many houses have been built and delivered, and whether there were any questions or problems during the construction or delivery of apartments.
Taking into account the above risks, we can conclude that such an investment is profitable.
Attention! To benefit from buying an apartment in a building under construction, you should not be fooled by a too low price and a young developer. It is better to choose a company with well-deserved authority and an existing history in buildings.
Purchase of land
You may ask, is it profitable to invest in real estate such as land? But the more profitable the deal, the more nuances and risks it has.
Land plots have their own specific characteristics. The plot will not always be salable and easily rented out. When purchasing land, it is important to consider conditions affecting liquidity, such as:
- Remoteness from the city;
- Location;
- Popularity of this direction;
- Availability of communications and the possibility of their installation.
Also, when choosing a land plot, it is worth taking into account environmental nuances, political and economic factors. If you take into account all the features and conditions, buying a certain plot of land can make a significant profit.
Is it profitable to invest in country real estate?
Over the past few years, country holidays have become very popular, and as a result, there has been a demand for renting cottages outside the city. Due to the good demand for this rental option, we can say with confidence that the investment will bring good profits.
Also, when purchasing a plot of land or an unfinished house, if it is possible to carry out the necessary work, you can resell the plot with the house for a different price. Due to the good demand for country holidays, buying houses is also quite popular these days.
But naturally there are difficulties. The surrounding nature is important for successful rentals. A beautiful body of water and a nearby forest or grove will dramatically increase the demand for your offer. And the lack of natural beauty or inconvenient location will minimize the number of people who want to relax in your country house.
To sell a house, it is important to take into account not only the presence of a reservoir, but also the presence of shops, communications, and the proximity of schools and kindergartens. All this will affect liquidity.
Profitable investments in commercial real estate
Purchasing offices or shopping centers is the most profitable type of investment of this kind. But such an opportunity is far from easily accessible.
When starting this type of business, you will have to maintain constant strict control and personal presence is necessary at all times in order to avoid various types of violations. Installation of meters, legal operation of the building, accounting, payment of taxes and much more require additional help from professionals. Finding such people is also not easy; it is a certain risk and requires your constant personal presence and control.
We have considered all the main types of real estate investments and the nuances related to them. All you have to do is choose the most suitable way for you to invest your money.
We invite you to consider the positive aspects of such a business and possible pitfalls. Advantages:
- Stability;
- Safety of the investor's savings;
- A sufficient level of risk is compensated by a high level of profitability;
- Inflation protection;
- Financial freedom for the investor;
- The trend towards development and growth in the real estate sector;
- The opportunity to receive passive income from an undervalued property by simply reselling it, but over a longer period of time;
- When purchasing an asset on credit, the price of the object rises, and the value of the ruble falls, as a result, inflation “eats” your overpaid%.
As you can see, there are quite a lot of advantages. We've covered the main ones. But in any business there are also possible problems that investors may encounter. Let's consider the main nuances:
- Low liquidity, delays in resale or rental are possible for various reasons;
- The risk of incorrect maintenance and operation of the facility, which may affect the technical condition;
- Risks associated with investing in objects under construction that depend on developers;
- There is a dependence on the economic situation in the country;
- Possibility of additional expenses;
- Inability to predict exact future costs.
All possibilities of making money from purchasing real estate were examined in detail. Now it has become clear and obvious that this type of investment is one of the most profitable and promising. If you have a certain “baggage” of your own funds, it is possible to earn very good money. If money is lying on the shelf, inflation “eats” it, and if it is in motion, you can make a profit and manage it further.
You may be asking about investment opportunities in Moscow and how it will work? Large cities such as Moscow or St. Petersburg are an excellent start in investing. The cities are large, dynamic and actively developing, which opens up new opportunities and prospects for earning money.
In conclusion, let us comment on the question: how to invest money in real estate with low capital? It's very easy to do. If you have funds for a down payment, you can purchase assets on credit. Inflation will happily “eat up” your overpayment, and the constant rise in real estate prices will give you that treasured profit.
We invite you to watch a video that briefly explains why investing in assets such as real estate is beneficial.
How to buy real estate that will generate income?In contact with
The unstable economic situation makes many citizens of our country think about how to save their savings from inflation. The simplest option is to purchase some material value, for example, a house or apartment. We will talk about how to invest money in real estate in 2020 and get the maximum benefit from it in this publication.
Expert forecasts
The uncertain economic situation forces many citizens of our country to take some action to preserve their savings. Each person solves this problem in his own way. Some buy everything in household appliance stores, others exchange rubles for dollars or euros. There are also citizens who are interested in whether it is worth investing in real estate.
If you pay attention to, the most reliable option is investing in real estate. Recently, due to instability in the market, the opinions of experts have become divided. In this regard, many citizens have a question: is it profitable to invest in real estate now?
This year, mortgage lending rates increased, and accordingly, demand for it began to fall, and this, accordingly, will entail a decrease in demand for real estate. Soon, developers will need money to pay off loans, and they will be forced to sell housing at a low cost. That is, if you wait a few months, many offers for the sale of cheap real estate will appear. But some experts who have extensive experience in this area believe that you need to hurry up with the purchase of housing, since construction is starting to rapidly become more expensive, which means that square meters will soon rise significantly in price. In addition, some developers have completely suspended sales due to the unstable economic situation. When they resume, housing prices will no longer be the same. If you're wondering whether to invest in real estate in 2020, you need to hurry.
The secondary market is not lagging behind new buildings. Some owners unjustifiably raise prices for their housing, so houses and apartments at old prices are sold very quickly. If you decide I want to invest money in real estate, act right now, since the market situation can change dramatically at any time.
Where to buy real estate?
Let's figure out whether it is profitable to invest money in real estate abroad? In the economies of many countries around the world, real estate is usually valued in dollars or euros. Now let's give a simple example. The house, located in Spain, costs approximately 45 thousand euros. For residents of this country, its price has not changed, but if you recalculate the cost of this object into rubles at the current exchange rate, the result will be a significant difference in prices. For this money you can buy a good car. In this regard, our compatriots who have their own savings are often interested in how to invest money in Russian real estate. Many withdraw deposits from banks and buy country houses, apartments or commercial real estate, because they believe that this is the most reliable way to save money. In addition, real estate can always be rented out and receive a good, stable profit from it.
Buying property abroad is too risky. The sanctions that are applied to our country may have a negative impact on Russian citizens in the future. At any moment you may not be allowed into the country, or even have your property taken away. Therefore, before investing your capital in foreign real estate, think again, it may be much more profitable to find out and invest in this financial instrument.
If you keep your savings in rubles and are wondering whether it makes sense to invest money in real estate, urgently start looking for suitable options. It is most profitable to buy apartments in large promising cities of our country. If their price does not rise in 2020, in any case, such objects will retain their nominal value during the crisis. An unstable economic situation can have a detrimental effect on real estate located in subsidized areas and forgotten small towns. In such regions, real estate is not in great demand, so prices are cheap.
Advantages and disadvantages of investments
Free capital is money that can be invested in some profitable business without damaging the main budget. According to experts, investing in real estate is one of the most profitable types of investment. To understand whether it is worth investing in real estate now, you need to evaluate all the possible risks and benefits.Advantages:
- Insignificant risks of complete depreciation of assets;
- Decent profit;
- High demand;
- Preserving capital from inflation.
Flaws:
- Low liquidity does not allow you to quickly return the invested money;
- To invest, you will need large starting capital;
- Maintenance costs.
Of course, this investment instrument has its risks. For example, if you want to purchase real estate at the construction stage, you need to carefully choose a company so as not to run into scammers. Investors who buy properties for resale may face significant challenges in finding buyers. It is unlikely that anyone will want to buy a house or apartment at inflated prices, so they will have to wait until the market value of the property begins to rise. The investor also runs the risk of losing the property as a result of a fire or natural disaster. But this is not a reason to doubt whether it is worth investing in real estate today.
In any case, it comes down to the fact that it is best to invest your capital in time-tested, reliable investment instruments that work in any economic conditions.
Types of real estate investing
The easiest way to properly invest money in real estate is through resale. Until 2007, prices in this market rose annually by 20–30%, so this type of investment brought good profits. Nowadays, the situation has changed, so before investing money in real estate, you need to decide on the goals you want to achieve.
Let's take a closer look at what real estate to invest in to make a profit:
Secondary housing
Perhaps this is the most profitable option for novice investors. But it requires a lot of attention and certain knowledge. Before deciding whether to invest in real estate on the secondary market, you need to monitor the market. From time to time there are very profitable offers that allow you to purchase a house or apartment in poor condition for literally half the price. After renovation, this property can be sold for twice as much. The profitability of such investments is at the level of 30-40 percent. With a successful combination of circumstances, you will be able to turn over your capital 2-3 times in one year. If you cannot decide which property is profitable to invest in, pay special attention to the secondary market.
Investing at the excavation stage
This investment option allows you to get a decent profit. Changes in financial markets are reducing demand for housing under construction. In addition, loans for developers have become significantly more expensive, so many companies began to freeze their projects. If you doubt whether you need to invest money in real estate at the foundation pit stage, it is better to abandon this idea. An investor who has made such a decision must carefully study the history of the developer, find out how many objects he has put into operation and how many are under construction. It is advisable, before investing your money, to personally familiarize yourself with all construction permits.Commercial real estate
This investment option is suitable for those who are planning to open their own business. If you are determined to invest money in commercial real estate, you should remember that renting or reselling such properties requires certain knowledge and experience. In addition, there is too much competition in this market segment, so before you get into this business, you need to carefully consider whether it makes sense to invest in commercial real estate.
Properties for rent
Are you interested in how to profitably invest money in real estate? According to experts, the most profitable way is to purchase residential and commercial properties for subsequent rental. This is the best option for those who are looking for...
Before the crisis, many citizens of our country took out mortgage loans, bought housing and rented it out. Using the profits, they paid off the mortgage and after a certain time received ownership of the house or apartment. But today, mortgage lending has become much more expensive, and the demand for rental housing significantly exceeds supply. Therefore, if you cannot decide, pay special attention to this investment instrument. Your capital will be reliably protected from currency fluctuations and inflation, and at the same time it will bring a good, stable income.
Experts do not recommend that novice investors invest money in commercial real estate. The demand for such objects has decreased significantly, since due to the crisis many businessmen cannot pay high prices. It makes no sense to rent out commercial real estate for pennies, which is why many retail spaces and office centers stand idle. If you do not want to invest in residential real estate, it is better to take an interest. This is one of the most reliable financial instruments, which is characterized by high liquidity.
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New buildings
Recently, the level of competition in the primary housing market has decreased significantly. If you are thinking about whether to invest money in real estate, you should know that the demand for primary real estate is almost equal to secondary housing. Prices for new buildings have become quite affordable for people with average incomes. In addition, many developers offer installment plans, and this is very profitable and convenient for those who buy housing on credit. But many investors still doubt whether it is now necessary to invest money in real estate during the construction phase, since it turns out that they are investing their capital in non-existent objects. Also, do not forget that scammers periodically appear on the market. They offer unrealistically low prices, collect money and disappear in an unknown direction. Therefore, if you want to invest profitably in real estate, be very careful and careful.
Since the beginning of 2014 There has been a significant increase in private investment in real estate. The political and economic situation in Russia has forced citizens who want to at least preserve their savings to transfer them from bank deposits to apartments on the primary housing market and retail premises (street retail). Everything returns to normal.
Photo: Depositphotos/Deklofenak
It seems that the old rule of the Russian non-professional investor has worked: “In any unclear situation, invest money in real estate.” As the head of the new buildings department of the MIC Group of Companies Alexander Engel says: “For the majority of our citizens, investing money in square meters is a more understandable and less risky matter compared to the securities market, bank deposits and the precious metals market.” And as a guide, as Vladimir Bogdanyuk, head of the analytical and consulting center Est-a-Tet, notes, previous crises serve as a guide: real estate prices then quickly recovered, and their growth continued at least within the limits of inflation. Therefore, the share of investment apartments in housing construction projects on the primary market has increased. According to the head of the analytical center of the OPIN company Denis Bobkov, the share of investment purchases in the spring amounted to a record 30% against the traditional 10%.
But to be a successful investor, you need to know the rules of the market game. In addition, when sitting down at a card table, it’s a good idea to have more chips. The higher the cost of admission to the private investor club (investment volume), the more options available. And the effectiveness of investments depends on this.
Private Investors Club
Detailed socio-demographic characteristics of private investors are not that important. In short, these are citizens investing in real estate from 2 million to 50 million rubles. “These are wealthy people who have housing and available funds and who invest money in real estate with the expectation of making money on resale or receiving a stable rental income. Most often, they have the entire amount necessary for the purchase, and less often they get the missing funds through a mortgage,” - Denis Bobkov paints a portrait of a private investor. And there are 80% of such investors among investors operating in the real estate market.
The most understandable and accessible for them is the mass housing market. “The cost per square meter here is not as high as, for example, in the segment of commercial real estate or luxury and business-class residential properties. At the same time, there is always a demand for such goods,” says Alexander Engel.
If we talk about commercial real estate, the street retail segment has been the leader in private investment for several years now. They are also investing in small office blocks. Since commercial real estate prices have been rising at the rate of inflation in recent years, investors are presumably counting on rental income rather than speculative sales. According to estimates by Denis Sokolov, head of the Cushman & Wakefield research department, in the first half of the year 10-15% of all investments from private investors were spent on the purchase of small offices or blocks in office buildings in Moscow, the rest went to street retail.
Investment Leader
After the crisis of 2008 and high-profile stories with defrauded shareholders, players in the real estate market were wary of buying an apartment during the construction stage. But now most investors are grazing on the market of new buildings. “Serious work has been done at the legislative level,” explains Alexander Engel. “Today, most developers work within the framework of Federal Law-214, which maximally protects the interests of shareholders.” The main increase in the value of real estate in the primary market is due to an increase in the stage of construction readiness of the facility; overall market growth, as a rule, does not exceed the inflation rate.
There is the highest demand for new economy and comfort class buildings in the old borders of Moscow, and the fastest turnover of money is also here. According to the general director of Metrium Group, Maria Litinetskaya, an investor purchasing such apartments can count on the standard profitability for new buildings in the capital: over the entire construction period (about 1.5-2 years), the cost per square meter increases by an average of 30%.
“The most advantageous offer is presented at the initial stage of construction, when the project has minimum prices. The high risks of purchasing at the initial stage of construction are compensated by the maximum profitability, which in some cases can reach 50%,” notes Vladimir Bogdanyuk.
According to him, most investors in the primary market sell their properties before receiving ownership rights, when the price has exhausted all opportunities for growth and the project will soon be handed over to the state commission in order to avoid additional costs for paying taxes.
Experts note interest in a new, but already proven successful format of apartments in Moscow. On average, prices per square meters in apartments are 15-20% lower than in apartments, so prices rise significantly as construction progresses.
It must be said that renting out an apartment is an unprofitable business model for a private investor. According to the Miel company, the average profitability of an apartment in a new building of economy and comfort class under the rental scheme today is 4-7% per annum with an average payback period of 18-22 years. The profitability of apartments is higher: 9-12% with a payback period of 11-13 years. But this formula does not take into account possible downtime of housing and utility bills. The profitability of housing can be increased if you register an individual business and switch to a simplified taxation system (income tax for individuals when renting out an apartment is 13%, and for individual entrepreneurs - 6%).
And others
In 2013 A new niche has formed in the market: private investors with amounts ranging from 1 million to 10 million dollars began to purchase Moscow offices in blocks. Before this, the traditional area of investment in commercial real estate for private individuals was retail outlets. This has nothing to do with the current political turbulence, just a way of putting eggs in different baskets.
According to the general director of the company "Miel - Commercial Real Estate" Alexander Bolotov, the most attractive prospects for investing in commercial real estate open up starting from the amount of 800 thousand dollars. But the threshold for entering this market is lower: 250-350 thousand dollars. For this money it is possible to purchase either a small office block in a business center, or a retail space.
“Street retail on the ground floor of a building brings a stable income of 11-12% per annum, but this applies only to the most liquid objects located on the main shopping streets of the center or in walkable places in residential areas,” says Bolotov. “The profitability of the office segment is lower - 8-9% per annum. But the choice of small premises in high-quality business centers today, in contrast to the situation two or three years ago, is much wider. Within $380 thousand you can purchase an office space measuring 100 sq. m in a business center with good location. In the retail segment, for the same amount you can only buy a room with an area of 50 sq. m."
Comparison of investment instruments
The Russian economy has come a long way since emerging from the global financial crisis of 2008-2009. Renaissance Capital looked at how the main investment instruments available to the average resident of our country behaved in the post-crisis period.
Comparative returns of investment instruments for 2010-2013.
How did they think? Real estate in rubles, including rent and personal income tax- in the calculation, data from the site irn.ru about the Housing Cost Index were used: the calculation was made taking into account the dynamics of the US dollar exchange rate, income from renting out real estate at a rate of 5% per year and excluding personal income tax. To calculate profitability for four years, personal income tax was taken into account only for rental payments. Weighted average rates on ruble deposits- average values for January of each analyzed year; taken from the “Bulletin of Banking Statistics” of the Bank of Russia for deposits in rubles for a period of more than one year. Ruble yield on dollar deposits taking into account conversion- weighted average rates of dollar deposits for a period of more than one year are taken from the “Bulletin of Banking Statistics” of the Bank of Russia. They are then adjusted taking into account the dynamics of the US dollar/ruble exchange rate and the conversion cost, taken as 4%. To calculate the four-year return, conversion costs were taken into account once rather than every year. Mutual funds- in the calculation, data from the site investfunds.ru were used: for each analyzed year, five open mutual funds were taken, which were leaders in terms of the volume of funds raised based on the results of the year preceding the analyzed one. These funds focus on either stocks or bonds or both. For the selected mutual funds, the weighted average income for the year was calculated, taking into account personal income tax. Gold- the calculation was made according to data from the Bank of Russia, website cbr.ru, taking into account personal income tax and conversion costs, for which the Sberbank compulsory health insurance benchmark was used: the price spread between sales and purchases as of the date of this study was 5.8%. To calculate the four-year return, conversion costs were taken into account once rather than every year. Inflation- according to Rosstat. MICEX Index- according to the Moscow Exchange. US dollar to ruble- calculated according to the Bank of Russia as the ratio of the average exchange rate for January to the average exchange rate for the same month of the previous year. |
I wish I knew the purchase
The most important and painful risk of purchasing primary housing for any purpose, as follows from a survey of experts conducted by the editors of RBC Real Estate, is long-term construction that turns into unfinished construction. There is also a risk of not recouping your investment due to the lack of price growth for the project, difficulties in finding buyers and the associated need to provide a discount for the project.
But all these risks can be minimized or completely eliminated. Firstly, you need to carefully check all title documentation for the project, the financial condition of the developer company and the portfolio of projects it has implemented. Alena Deryabina from Don-Stroy Invest also advises paying attention to the behavior of the developer: “The developer’s readiness to organize hasty “sales” at the first signs of a decline in consumer activity most likely means that he does not have his own funds or serious financial partners and requires a sharp increase in incoming "
Secondly, when choosing a project for investment, be guided not only by the most affordable price, but also take into account the entire set of qualitative characteristics of the project, as well as the competitive environment, in order to correctly assess its liquidity and prospects for further resale. The new building should be located in areas of Moscow or cities in the near Moscow region that are in demand among buyers; good transport accessibility of the property is also desirable. For investment purposes, it is best to purchase one-room apartments and studio apartments, which are always in demand.
According to Anton Gololobov, marketing director of Villagio Estate, purchasing real estate in a low-rise complex outside the Moscow Ring Road can also bring good returns (up to 10-12% per annum). “A couple of years ago, one investor purchased several townhouses in our premium village at the start of the project. Now that the houses have been put into operation, their value has increased by 25%. The investor plans to invest in finishing the townhouses, which will add another 15-20% to their price.” .
The investment window is closing
Now the number of investment sales has decreased compared to the first quarter of the year. But people making money from the rising cost of a square meter did not leave the market. The crisis state of the economy is pushing them to actively invest their available funds in real estate. According to the head of the analytical center of the Domus Finance company, Alexandra Biryukova, investment transactions should now be aimed at preserving savings, and not at significantly increasing them. Still, it won’t be possible to increase it much. The expert calls an effective private investment the acquisition of the “right object” with a subsequent significant increase in its prices over the selected period and the successful sale of the object. Of course, if the investor’s goal is to sell the property as quickly as possible, then a temporary drop in demand, which may occur in the wake of the crisis, will make it difficult to achieve this goal, but is unlikely to affect the price of the property.
It is still difficult to predict how much and when the market will decline - there is too much uncertainty in it. But everyone is confident that demand and prices for housing and commercial real estate will begin to fall. According to experts, the investment “window” is closing and the pre-crisis rescue of private capital through real estate may soon end. However, one of the lessons of the 2008 crisis. is that the crisis also opens up new opportunities. Then, amid a rapid economic recovery, many succeeded by purchasing real estate and other assets in a growing market. Now it would be good to understand where his “bottom” is. As investors say: “Cash is king!”
Sergey Velesevich
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