Real Estate Investment
On a good foundation you can build a good building,and the best foundation in the world are for the money. "
Miguel de Cervantes. Don Quijote.
Real estate is one of the more traditional investment vehicles. Physically and psychologically close to the inverter and are part of our financial culture. Phrases like "The house wants married", "The best investment is bricks" or "Nothing better than the roof itself" demonstrate this cultural imprint.2 bhk apartments in trichy 2 bhk Flats for sale in trichy
Real estate is an imperfect market, compared to what happens in the stock market, because the number of participants is much lower. Their main problem is the lack of liquidity (not a minor detail!).
The property is an interesting investment vehicle, whether the handled properly. Generally provide adequate protection against inflation and correlación1 with other assets is relatively low, so they are useful to diversify an investment portfolio.
Real estate is a good investment option.
The Achilles heel of the property is indicated in its name, "can not move", and therefore are "captives" of the jurisdiction where they are. When planted in countries of little legal certainty and large fiscal voracity are permanently exposed to emergency taxes, extra fees or arbitrary regulations. Being recordable assets (listed in the Register of Deeds and traded through deeds) is difficult for investors to avoid paying taxes. They are also subject to country risk, systemic risk, which is often the residence of the investor, which suffer identical fluctuations that much of the equity investor (business or commercial activity, domestic bank accounts, cars, etc..), By it is not offset their risk.
Regarding performance, it is estimated that a property produces, in normal times, a gross income in the order of 5 to 10%. From here you have to deduct depreciation, dead periods, repairs, taxes, etc.. Proceeds from rentals are difficult as re-investment in real estate, which requires great investment discipline, which should apply to a fund and then buy more properties, ball if you want to benefit from the exponential growth of compound interest (effect snow).
As for the attention they require for their care and management is much higher than the other mentioned instruments, precisely due to the fact that physical assets. Present certain risks that should be covered by their respective insurance (other expenses to consider), for example the risk of fire, floods, riots, terrorist acts or wars. Other risks, such as sinking or construction defects, often not feasible to cover; it is possible that a tenant does not pay and must be evicted, which means additional expenses and lost income (also often necessary repairs for the poor treatment of these persons) -. There is an additional risk, usurpation, facilitated by legal uncertainty and inaction of the authorities in Argentina.
When you invest in the real estate market should consider the following rule: The gain must be obtained to buy, not to sell. This is where being an imperfect market becomes a benefit. Imperfections allow opportunities exist buy below market value. Real estate business should be conducted only under this condition: Buying in an emergency situation, paying a price below market value.
Here are some examples:
• Public Shooting: Here the sale or yes takes on a certain date (at a base price or sometimes without). This provides exciting opportunities. You need to have cash (usually 30% immediately and the balance within a few days). We must also deal with "La Liga", which usually grab operations. Attending an auction is a very educational activity for investors interested in the real estate market.
• Inheritance: The heirs of a succession usually require liquidate their properties with some urgency, and the diversity of interests of participants allowed the opportunity to negotiate favorable purchasing conditions.
• Periods housing slump: They are the ideal time for shopping: when all sold! The property has business cycles of expansion and retraction systemic. Wait patiently for the time of falling prices is the best strategy. If one analyzes the market and historical evolution can detect most convenient valleys. Periods of economic disturbance, such as devaluations or institutional crises-usually accompanied by sharp price declines (eg Argentina, 2002).
Within the broad real estate market there are several options. Briefly examine four: fields, urban lots, houses and apartments.
• Fields: We assume that we are fit for productive activities (usually agricultural). Typically require greater investment and expertise. His administration has some complexity. They can be let (rent) for rent. Being linked to external market related activities (mainly agricultural), their dollar value is more stable than the rest of the estate; in exchange liquidity is lower. Their value may increase over time due to the zonal improvements.
• Urban Lands: Serve as a long term investment for its increase in value over time as cities grow. In general do not generate income, with some exceptions, such as parking lots for rent or deposits. Municipalities often punish the vacant lots with higher taxes to avoid land speculation caused by the appreciation of value above.
• Homes: investments involve certain magnitude because a lot is acquired and construction. The lot value increases over time, but the building undergoes a process of depreciation (has a lifespan and require maintenance). Management is more tedious than a department.
• Departments: They require less investment than a house and less maintenance. They are the most common method for obtaining a rental income election. Depreciate over time due to consumption of the life of the building.
Each of these classifications may be subdivided and studied in more detail, considering issues of location, type of construction, property type, etc..
It should be stressed that in the field of real estate, the most important factor is the location of the property.
Note that from the point of view of personal finances, especially when we talk about housing, it is more convenient to rent than buy. But in case you want to own your own home, it is usually more favorable shopping (drawing favorable terms) to build, as the build we lose the opportunity to purchase a bargain and also to carry out the project itself, it tends to overestimate the house. Each square meter of added more to the taste of the owner or decreases liquidity of the property, to further limit the universe of potential buyers.
It can be appropriate when we use a modular building project carried out in stages, always keeping the idea of not deviate from what the market demands (to greater liquidity and value to the property). The luxuries and tastes hardly be reflected in the resale price of construction (A Carrara marble cladding in the bathroom can be aesthetically pleasing to the owner, but is often not properly recognized by the buyer, to evaluate the property at the time of acquiring it). This does not mean that you can not afford some luxuries, but from the point of view of Personal Finance this choice is not the most appropriate for your equity.
To purchase a property for investment or for personal use locate necessary for each step of the transaction advice. The cost of the consultants should recover the benefits they will generate. In a joint operation may involve the following advisory: a real estate agent to get the best property at the best price (if buying at auction should first contacting the auctioneer for details and get your feedback); a notary to perform notarial whole process of transfer of ownership (check titles and debts, ticket purchase venta2, writing, etc..) counsel to advise on any legally complex situation or any potential risk; and (preferably independent) financial consultant, to assist in all aspects relating to the convenience of operation, funding and its impact on the economy of the buyer.
Remember that financial intelligence is acquired through study and ongoing practice. Start today a self-training; do not miss an opportunity to incorporate new knowledge and to maintain contact with the market. That is, reading good books on the subject, attend seminars, get a good mentor, consult specialized magazines and newspapers, perform operations that keep 'connected' with the market and any other activity that allows you to increase your financial capabilities.
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