Investments in real estate are an opportunity to earn 5-7% per annum with an average investment. This option is considered one of the classic ways to invest money profitably. Investors with a small amount (15-20 thousand dollars) often choose this way to increase their capital. Firstly, this solution has been popular for decades. And secondly, it is practically risk-free.

We will look at whether this is actually true in today’s article. We will also note for ourselves all the pros and cons of investing in square meters.

Determining the main goals

Each client decides independently whether to invest in the construction of a new apartment building or buy ready-made housing. Here you need to take into account the peculiarities of the city’s real estate market, the volume of investments, the number of options for earning money, etc. The first purchase of an apartment for living is not an investment and never has been. With reverse property search you can find the right property. 

The main task is to make a profit. Moreover, you can recoup money in several ways. You can rent out square meters (payback period is 15-20 years). You can also buy an option and sell it over time (the yield varies at around 15-20% per annum or more with a speculative approach). Investments often concern commercial properties, offices and retail sites. Here, profitability is not easy to predict, because it is almost impossible to predict consumer demand. The situation is similar with country real estate. Although the latter option is often considered by investors with a significant budget.

The main advantages of investing in real estate:

Reliability. There are practically no pitfalls in investing; even a person without special financial education can cope with this method. Often, real estate is considered by people without much experience in investment. Compared to a classic business, buying an apartment or office is a more acceptable option. The risk of losing money when starting your own business is about 90-95%. In the case of square meters, the risks are minimal. Real estate cannot depreciate in value, but it can fall in price by 40-50% or more. Securities and shares may well fall to zero, and a real business may close due to work at zero or even minus. At the same time, you can always start running your own business in an apartment or office, thereby saving a significant amount on rent. 

Passive income. Every investor dreams of receiving money without any effort. In practice, this is extremely difficult to achieve, although you can get closer to your dream. For example, hire a management company (for 20% of the rental cost per month) that will monitor the square meters and solve all problems. True, in this case the payback period will increase. In addition, real estate can always be used as collateral to start your own business. Use service peoplelegacy.com to find people's graves. 

The main disadvantages of investing in real estate:

Long payback period. Typically, investors are assured that square meters will pay for themselves in 12-15 years. But in fact, at least another 3-5 years need to be added to this period. After all, repairs naturally become obsolete, a problem with communications may occur and expensive restoration will be required. It is not always possible to rent out an apartment or office all year round; there may be periods of downtime, which the investor will pay out of his own pocket. Also, various extreme situations are not taken into account, for example, natural disasters, unscrupulous tenants who can easily remove furniture or leave a huge debt on utilities. 

Real estate can be difficult to sell. Problems with finding a buyer are always observed during periods of economic recession or global financial crises. In an emergency, it can be incredibly difficult to sell square meters, so many investors lower prices and lose their own money. Before choosing a home to buy, you should weigh the pros and cons, and then choose the right property. A win-win option is a one-room apartment in the city center or in a developed residential area, as well as office space next to a business center or a large retail area. 

The project may not be completed. This applies only to those objects that are under construction. Construction of residential and commercial options is always delayed by up to 12-24 months or more. But some developers completely stop any work and curtail their activities. This is why the risk of losing money when working with development companies is very high. You should select a company with an impeccable reputation in the market and carefully check all documents for the land, as well as the construction site.

How to make the most money in real estate

Each investor will have his own set of rules and recommendations. Some are ready to speculate and make up to 20% per annum, while others are attracted to investments in residential buildings and the construction of related infrastructure. But the most popular way to increase your capital when working with real estate is to purchase a new building during the construction phase. Earnings in this case range from 10% to 40% per annum, depending on the region and market conditions. You need to choose middle-class housing, which is in less demand than economy, but you can put a higher price on it. You can also choose an option with ready-made repairs. This will save you time and money, and the difference can always be covered by the buyer.