Tips for successful investment in real estate

Did you know that real estate is one of the few investment goods that is not usually devalued over time? Normally, since land is a finite asset, the offer of properties cannot be increased infinitely. In addition to the regulatory plan restrictions per commune,  we must pay attention to some advice  to undertake before investing and seeking to maximize the results home buyers houston.

Buy in green or buy in white?

Many people buy homes “in green”, that is, they sign a purchase-sale contract without the construction of the property being completed. This can be one of the best advices to undertake, since the costs are greatly reduced when buying in this modality versus having the property finished.

Beware, you have to be careful to know how to differentiate this mode from “blank” purchases, that is, where permission and land for construction already exists, but its beginning has not yet taken place. Although buying in white is considerably cheaper than buying in green, there are some risks, so it is important to consult with prestigious companies in the field and years of experience in the market. Normally the earlier the real estate project where you invest, the better the “equity” capital gain effect of my investment.

Investigate the area

Another advice to start with real estate investments goes hand in hand with the sector where you want to invest. In this sense, generally, the more consolidated the area where one wants to invest, the lower the returns that I will be able to obtain given that the risk premium is low. Otherwise, areas in full development normally have higher Market Capitalizations.

Build a personal or family budget

Before investing in real estate it is necessary that you establish a budget for your investment. It is very important to know how much monthly flow I have in order to be able to meet without compromise the monthly commitment of the foot to finally obtain my mortgage credit. Also, consider the operational expenses, quarterly contribution costs, maintenance and eventual taxes that I must cancel when having more than 2 properties, among others.

Find a good property broker

If you are looking to allocate the minimum amount of time to your investment, you should look for a good property broker so that he can worry about managing the property with the minimum risk of not paying, and managing all possible after-sale problems that normally occur. in newly delivered properties, among others.

Compare the pure profitability of the asset versus the cost of credit

To seek to improve the profitability of your money, you must evaluate what the pure profitability or ROA is versus the cost of your bank’s interest if you are evaluating an operation with mortgage credit.

The ROA is measured as the rental value for 12 months, divided by the purchase value in pesos of the property. To this income flow I must deduct payment contributions, projected vacancy rates among others. And in general, all the items that can discount income from this calculation of profitability, so that we would finally obtain an Adjusted ROA.

To the above simply I must consider the percentage interest rate that the bank or CAE will apply to my credit. If my “Adjusted ROA” is higher than the CAE, in simple terms it would make sense to get into debt for example 4% if the adjusted income asset 8%, given that it would take me a 4% differential.

Once you are in a position to take the first steps in the matter, it is best to seek the advice of experts to find the solutions that best suit your abilities. And as the saying goes, “He who surrounds himself with wise men will be wise.”