In times of economic growth, real estate investment is a good option for those with substantial capital to invest. The market is full of different options: properties to rent as normal housing or as holiday rentals, or to renovate and sell. Choosing the best option isn’t easy, doing so requires knowledge, market research, and expert advice. However, there are some points to keep in mind which could help you make a profitable investment.
Throughout the article we’ll reveal these key points. But first we’ll outline why it can be beneficial to have a real estate asset.
Is having a real estate asset beneficial?
Are you wondering if it is truly beneficial to invest in real estate? The simple answer is yes. Real estate assets can be a great source of income. However, a bad investment could bring about major losses for a company or individual.
To avoid these losses, it’s important to listen to professional advice, to people who have knowledge of the sector and can help you make a good real estate investment which will increase personal or company wealth. It can also be very helpful for making payments or paying off debts, and could be used to make more investments to generate more profit.
Keys points to help you choose a real estate investment
Here are some tips to keep in mind when investing in real estate:
Location is key. You can opt for larger cities or tourist hot spots when investing in a holiday home. However, if you want to invest in a property with the hope of selling it later on, it’s best to choose cities with dynamic markets, for example: Cape Town or Johannesburg.
How to choose the best area? By studying it! We recommend searching for properties in popular neighborhoods where prices are affordable for the majority of the population. We recommend neighborhoods with high rental demand which are well-connected and with services such as schools, supermarkets, hospitals etc nearby.
Type of property
It’s important to choose the right type of property, so you must consider your different options: homes with furniture, without furniture, the number of bedrooms as well as the options we mentioned beforehand (holiday rentals, ordinary housing rentals, etc.). Being clear about the objective and the options that exist in the market before investing is key for the investment to be successful.
Condition/ physical state of the property
Taking the property’s condition into consideration is also vital when investing. The condition refers to the age of the home, its layout, the state of its facilities, the qualities of the property, etc. All these elements will help you calculate the price of the property, its maintenance and its renovation, if necessary.
Before buying a home, it’s also important to know about all the urban planning regulations such as if more building work or new infrastructure or facilities, are planned in the area. Urban regulations also become very important when considering the land for real estate use. In these cases it’s vital to know if you can build on this land and what the regulations and requirements are. Being aware of all this information is necessary to avoid any surprises which could harm your investment.
There is another series of current regulations specific to each type of housing. It’s important to be well informed before investing! Currently, for example, there is a state housing plan which offers assistance to certain types of buyers, such as those under 35. There is also help with buying certain types of property, such as those in sparsely populated areas which have less than 5,000 inhabitants.
What’s the situation in the market? Any investor should take all this advice onboard when investing in property, especially the market situation and it’s recent history and evolution.
But what do we mean by market situation? What should be taken into account? The interest rates at the time of purchase, the mortgage law and the changes it undergoes, the situation with holiday home rental in Spain. All these factors will serve as indicators of the market situation.
When investing in a property, it’s important to know how profitable it is, how the rural and urban real estate markets are fairing, how profitable it could be to rent on the coast, etc.
To be able to estimate the profitability, you must consider the initial investment, the taxes you’ll will have to pay, the expenses the operation entails (for example: real estate advisors commissions, notaries, etc.), the money necessary to decorate, that is, painting, furniture, etc.If you take all expenses into account you can know exactly how profitable the property will be.
Types of real estate investments
In the introduction we mentioned several types of real estate investments. In this section we’ll tell you about them in more detail:
- Crowdfunding property: Many investors come together to make a joint investment in a property or any real estate asset.
- Buy a property to rent: It offers a long-term return and is a very common type of investment.
- Buy to renovate and sell: Unlike the previous investment, it offers very short-term benefits.
- Invest in real estate for tourism purposes: through platforms such as AirBnb or others, benefits can be obtained quickly.
- Invest in real estate for commercial purposes: for example in business premises, offices, industrial warehouses, etc.
- Passive real estate investments: these are investments made through teams of real estate investors who can invest without taking large risks. High returns are still possible.
Check with the best professionals to avoid risks in your investments!