Investing in real estate will always be good business for those who know how to do it. In any market, there are always offers and opportunities. Buying one property or perhaps several depending on your capital, is an alternative to make money work and ensure your future. Real estate offers financial security for investors small and large, and this will have a positive impact on both the local economy and your pocketbook.
According to the Real Estate Situation report by BBVA Research in Mexico, housing continues to be a profitable investment in general terms. Although investing in real estate involves a significant investment, the risks are lower, and it is a good option to achieve financial stability and growth.
There are 3 ways you can invest in Real Estate:
1. Purchase and sale of real estate. Buying and selling a property is a sure way to protect your money and make it grow. Although, it is not as simple as it seems. Why? Because you must require a strong investment to achieve this and this investment can be your own capital or a mortgage loan.
When you acquire an investment commitment of this magnitude, you assume to face all the obligations and deadlines that the real estate purchase/sale process implies; such as, the payments of taxes and services, credits, notarial services, and others that may arise during the process.
On the other hand, investing in real estate often involves lengthy procedures in private and government institutions, such as public banks, Infonavit, or Fovissste.
2. Leasing. It is a widely used option today. It consists of buying a property to be rented later, either for commercial or housing use. In this case, the performance or profit will be reflected with the monthly rental charge. The advantage is that, according to the quality of maintenance applied to the property, the greater its capital gain (value) and it is possible that the person who rents it, is willing to pay more.
3. Crowdlending. This term is very fashionable; it refers to a way of investing and obtaining financing. And it is achieved through FinTechs, which are dedicated to raising funds through small investors through the technology known as ‘blockchain’.
Gather a group of investors, who acquire a part of the property to later rent it to third parties. In this way, it becomes possible to invest in this sector with smaller amounts of money but that allow higher returns.
Why investing in real estate to grow your money?
If you decide to invest your resources in real estate such as properties and land, you can obtain some of the following benefits:
You will have security and flexibility in the future. Buying real estate is an action that will definitely protect your finances and your future in the event of an economic or personal emergency. That is, you will enjoy the flexibility to build more businesses with the same properties and continue to increase your capital and income capacity. In addition, a property is considered a long-term financial guarantee in the case of requiring loans, mortgages or retirement.
The return on investment rises. All return on investment is calculated depending on the conditions of purchase, the capital gain and the flow of money that said property obtains after being acquired.
It allows the value of a property to increase over time. It all depends on the existence of a large real estate project, large roads in the area, or that it becomes a fashionable area.
You must take into account that the price and value of a property are totally different concepts. You may have acquired a property for a price. However, its value may be different from what was established at the beginning and increase over time.
This increase in the final value will allow you to obtain an increasingly large return on investment, making it more attractive and useful to take advantage of your other investments.
Keep your money working
Another benefit is that you keep your money working. Without a doubt, capital gains, as we explained above, makes investing in real estate an activity that pays financially and helps you build part of your wealth.
The investment options are varied and low risk. Investing in real estate is very safe, the risks are low and you can use your properties creatively.
Investing in real estate does not necessarily mean that you should buy a house with a mortgage loan. There are many real estate options to invest such as (houses, traditional apartments, housing apartments, apartments in buildings, real estate under development, land for construction, premises commercial buildings, floors, among others).
This wide variety of investment options will allow you to diversify your money and have less risk of losses due to fraud, sudden changes in the economy or natural disasters.
Invest easily and quickly at your convenience. Investing in real estate is very simple when compared to other businesses. Real estate is the most accessible area for those with capital.
However, this rule is not followed by all those who want to invest in real estate, there are many options so that you can adapt your monthly payments to your lifestyle and ability to cover the debt, perhaps have a significant savings plan, which allows you to give the first step, check the constant income and organize your finances, without undoing your capital.
The ABC investor and the fundamentals of the investment that you should take into account
You do not need to be an expert to achieve a good return on investment. The key is to recognize the limitations and be aware of them.
However, when acquiring a property, you must evaluate certain elements, such as connectivity, location and developments around the property, for that investment to pay off and be fruitful.
Define your budget and save. The first thing you should do is determine the amount of money you have for your investment. Investments in real estate are for the long term; If you still do not have enough money, look for alternatives that require less money to start or start a savings plan as your main goal so that you can invest in a timely manner in the future.
Think about the objective of your investment. It is not only about the amount you want to invest, but about the utility that you will give to the property and the type of property you plan to acquire. Why do you want to acquire the property; to rent it, to resell it, or to live in it? It is important that you know for what purpose you are going to make the investment so that you are very clear about the area in which it is best for you to buy it and what type of profit you expect.
Consider that the times are reasonable and long-term. The return on investment is not immediate, you have to be very patient so that your property increases in value and is worth selling. Usually, investments mature in a period of 3 to 5 years.
Focus on the future productivity of the asset you are considering. If you want to invest a little and get a lot, lots are the best for you. Why? A lot is a land that has a lower purchasing cost located in an area with a lot of potential and will make you obtain a greater profit thanks to the added value of the area.
Look at the capital gain. The capital gain is the increase in the value of a property, that is, the monetary difference between the purchase price and the sale price, which increases thanks to the area in which the property is located. The security of the area in Mexico makes the capital gain of the property increase considerably.
Review everything in excessive detail for your safety
Be very cautious and careful when obtaining a property, the details are extremely important, you should consider that the property is registered in the Public Registry, know its tax situation and investigate the process to register it.
Avoid acquiring property that is in a will, that is, by inheritance. In this sense, do your research before purchasing the presale. For BBVA, this is an attractive option to invest due to the high levels of capital gains that can be generated, finding a project that is at a very early stage, either in a model or in a plan, will have a significant increase in value at the end of its construction. The key is that you take the time to research the developer in Profeco, in order to ensure their track record and reliability.
Invest wisely and not emotionally. The emotional attachment to the things we possess, many times, does not allow us to make the best decisions.
Avoid thinking about a property for a lifetime. Real estate is a business and you should think of your real estate in the same way.
And as former US president Franklin D. Roosevelt said: “Real estate cannot be lost nor can it be stolen; they cannot leave either. If bought with common sense, fully paid for, and handled with reasonable care, it is probably the safest investment in the world”.
