Інвестиції в нерухомість популярні та надійні

How to Invest in Real Estate Correctly and Earn Money

Real estate investments have historically been considered the most reliable in our country. They are often used as an alternative to bank deposits or storing money under the mattress. However, it’s crucial to understand the market and its specifics to invest money and make a profit. We will explore the features of real estate investments and how to invest in real estate correctly.

Real Estate Investments – Strategies

There are several ways to generate income when you invest in real estate. The most popular are:

  • Buying an apartment at the beginning of construction to sell after completion;
  • Renting out purchased apartments;
  • Buying to resell at a higher price after renovation.

The first option is the most profitable but also quite risky. The other two involve less risk but require larger initial investments and yield lower profits.

Pros and Cons of Real Estate Investments

Real estate investments, both commercial and residential, offer several undeniable advantages:

  • Investing does not require special knowledge or skills, unlike buying stocks or bonds;
  • The purchased asset is well protected against theft (except for hostile takeovers, of course);
  • Relatively low volatility, as real estate prices change slowly in most cases;
  • Inflation does not affect the value of the asset;
  • Potential for passive income through renting.

However, there are some drawbacks to real estate investments:

  • A relatively long payback period, especially if the purchase is made at the “pit” stage or for renting;
  • Possible low liquidity.
Investments in real estate are accessible to everyone

How to Invest in Real Estate – What Are the Risks?

Investing in real estate properties is traditionally considered relatively risky. Even in challenging times, they have allowed investors to recover their investments at least. Some risks still exist:

  • Unscrupulous developers are the most significant risk. Unfortunately, there have been instances in our country’s history where a company owner disappeared with the money, leaving buyers with nothing but a pit.
  • Real estate values do not stay the same. They can decrease or increase, as can rental prices. A property’s payback period can be significantly extended.
  • Sometimes, real estate deteriorates. For Ukraine, this is more than relevant. Insurance improves the situation but cannot entirely correct it.

Where to Invest in Real Estate?

The simplest in terms of investment is residential real estate, specifically apartments. What to consider when choosing them:

  • Region. It’s most convenient to invest in your city, but there are regions where housing is more liquid and can bring a higher future income.
  • Apartment size, floor level. One- and two-bedroom apartments on middle floors are most in demand.
  • Availability of infrastructure. A residential complex outside the city can be great, but selling or renting an apartment there will only be easy if there are good roads to it.

If several properties have been selected, follow these steps before investing in real estate:

  1. Check the developer’s reputation;
  2. Thoroughly check all documents – the land’s designated purpose, all necessary permits;
  3. Ensure there are technical conditions for connecting utilities – electricity, water, sewerage, and possibly gas.

Only when you are convinced that everything is in order and there is no tricky small print you can start your first real estate investments.

Investments in real estate – new constructions

Real Estate Investments – New Construction or Secondary Market?

Up to this point, we have considered investments in new constructions, as the value of a property typically rises sharply after construction is completed and it is commissioned. Thus:

  • The profit is higher than any bank deposit;
  • You just need to wait for the work to be completed.

On the secondary market, you can buy an apartment for resale or rent:

  • Resale involves purchasing an apartment in a good area but in poor condition. After a cosmetic renovation, it can be sold for more. Income can be obtained quickly.
  • Renovation is also necessary for renting, and it is important to monitor the technical condition of the apartment while receiving rental income. Such an investment will take a long time to pay off — about 10 years.
Investments in real estate – secondary market

Real Estate Investments – 5 Tips

In addition to the risks already mentioned, some signs help identify successful and less promising real estate investments. How do we recognize them?

For new constructions:

  1. When choosing a developer, talk to people who already live in the properties he has delivered. You can learn a lot of exciting things.
  2. Refrain from skimming on the services of a lawyer who will analyze the contract offered to you.

For the secondary market:

  1. Inquire about the building’s technical documentation. What materials were used for the floors, and how was the waterproofing done?
  2. Try to meet the neighbors. Antisocial elements living on the floor above can be the reason for the low value of the housing.
  3. Make sure that the apartment’s documents are in perfect order, that it was acquired honestly, that it was not mortgaged, that unknown persons are not registered, etc.

You should also read this article – How to Invest in Stocks: A Comprehensive Guide.

Choosing Between Real Estate and Business Investments in 2024 – Video

Learn more about the decision-making process for investing in real estate or starting a business in 2024. It covers the potential for monthly income from real estate, the level of control investors have in each option, and strategic advice for navigating both investment paths.

Video discussing whether to invest in real estate or business in 2024, highlighting monthly income potential and control factors

Conclusions

With the right approach, real estate investments are an excellent way to preserve your savings and earn a good income. Choosing a liquid property is important and ensuring the developer or seller complies with the laws.

FAQ About Real Estate Investments

What are the most important aspects of investing in the real estate market?

Premium investing in real estate, check out the location, market trends, property condition, and possibility to get the highest return on investment. Considering the economic stability and current demand in the area is essential for taking profit investment.

Is a residential or commercial real estate project worth the investment?

The real estate market allows you to choose between residential and commercial properties depending on your investing objectives, risk-tolerance level, and the capital you have access to. Residential properties usually have a lower risk profile, and the rent is more predictable. In contrast to industrial properties, commercial properties frequently produce better yields but are typically more complicated to manage and sensitive to economic conditions.

What can I do to minimize the risks of investing in real estate?

To decrease risks, research thoroughly, pick properties in suitable locations, conduct routine maintenance, and properly apply tenant selection. Another strategy to consider is diversifying your real estate portfolio by investing in different areas and types of properties, which can lower your risk level. On the other hand, finding appropriate insurance coverage is essential in guarding against unplanned expenses.

Eddy Coherent – Finance Expert with Extensive Industry Experience
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Eddy Coherent is a finance expert with extensive experience in the industry, known for his deep understanding of financial markets and strategies. He shares his expertise on the WeaveMoney portal, where he translates complex financial concepts into actionable insights. Eddy's contributions are valued for their clarity and precision, helping readers make informed financial decisions.

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