Buying a property in most cases is the largest investment that is made in life, however, in this article our perception is to invest in real estate, in this article I describe some modalities of this type of investments and the aspects to consider.
1. Buy a property to live in.
This investment helps increase your assets while paying for your house, it is the investment that most people make, but the following aspects must be taken into account:
- Have enough income to cover mortgage payments, in healthy finances these payments should not exceed 33% of your monthly income.
- Have a savings to cover at least 5 months for any setback when changing jobs or activities.
- The intention to make payments to principal to finish paying it as soon as possible and pay less interest.
2. Rent a house to live in it
Sometimes it is better to rent until you are sure of the property or the area in which you want to reside or buy a property. This can help you:
- If you are not convinced of the place of residence you can move to another property.
- It’s the best way to get to know a neighborhood or community without compromising your finances and the long term.
- Depending on the amount of the lease, this can allow you to save to get the property you want.
3. Choose the best mortgage loan
It is important to analyze the different conditions of mortgage loans offered by banks, because not only plays the interest rate, some aspects to take into account are the following:
- Looking for a mortgage broker or broker, by working with different banks, can offer you the best option according to your profile, income and type of property to acquire.
- Compare the credits to different terms and the insurance you must pay.
4. Looking to buy in an area of high added value
Plusvalía is the increase in the value of a property by the simple passage of time, so it is important that when choosing where to buy, it is an area of easy access, with services, security, among other aspects. Therefore, the following should be considered:
- Look for consolidated areas in the City even if this implies paying a little more.
- How conflictive is the area in terms of floating population, services and quality of life.
- The ease of selling a property.
5. Financial Investment
There are companies that offer a stake in the properties they build once they are sold, some others do so under the lease scheme of which you participate in a percentage according to your investment. The elements to take into account are the following:
- Verify if the company has had previous operations and how they have behaved.
- Study the project in which you are going to invest, to convince you that it is a good or profitable investment.
- Establish a limit to invest under this scheme and analyze the risks inherent to the business.
6. Buy low and sell high
You can choose to buy a property under construction, the presale price is usually a little lower than the sale, you can also choose to buy a house that requires a small rehabilitation and obtain a good profit margin on the sale of this once fixed. In the case of real estate at auction, most of them are scams, since you buy the transfer of rights or collection of the bank, not the property. Elements to consider in this modality:
- Studying not only in the cost of real estate, the area, the neighbors, as well as the age can play against.
- Get advice from a construction professional if you choose to rehabilitate a property for subsequent sale.
7. Buy to rent.
This is a conservative, long-term investment; However, it has a flat hidden in it, therefore, you must take into account the following aspects:
- If it is a purchase on credit, that the payment of the rent covers at least 80% of the monthly payment.
- That it is a good that can be rented quickly, there is a lot of supply in the market, so your property must be in a central area and that the rent is not very high, it is easier to find more people who rent at $ 10,000 than at $ 40,000.
8. Improve or remodel your rental property
You may already be operating with the scheme mentioned in the previous tip; However, you can make improvements to the property to make it more demanded to rent or even to ask for a higher lease. Aspects to take into account under this option:
- Do not exaggerate with the improvements that you can not include in the cost of the rent.
- Less, is more, some small changes such as the color of the paint, the change of a window, or changing the curtains for blinds dress your property.
9. Invest in land
Although it seems one of the easiest investments, many people are being fooled by unscrupulous real estate agents, since they offer land that does not have services, permits, land use, or that will not be inhabited in a long time. Therefore, you should take into account some of the following aspects:
- Know the area where you will buy the land.
- Define the use you will give to the land, that is, you can only wait for the surplus value and sell it, build on it to live or build together with a developer and sell the property.
To finish
These are some brief tips when investing in real estate, if you have in mind to apply any of them, you should delve into each one, do not take anything lightly, do not end up buying one each coffin, the one you will pay for many years, which reduce your ability to save and probably become your last resting place.
Lic. Cesar Alfonso Espinosa Palafox
Accountant, Lawyer and Personal Finance Advisor
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