In a situation as the current one, in which the bank deposits do not even give any profitability, there are a lot of clients and small savers, that ask me daily, if investing in properties pays of or not. My answer is always the same: yes, but smart. Meaning, planning that investment according to their profile, and depending on the expectations that they have.
That phenomena isn´t something new in our country, due to the real estate investments always had been a safe haven, both for companies and particular clients; and in an industry which is currently growing, it seems that it is the right moment to enter. As the American actor and comedian Mark Twain said: «buy land, they aren´t making it anymore». The signs and indicators that we manage point so, because we have reached the bottom, it seems that revalorization forecasts are high, although not in all the territories and in the same way.
So, as I said in the beginning, it is essential to make an analysis, and depending on our situation, choose one of the multiple choices that the market offers. Below, I leave some pieces of advice, that according to my point of view, they are the key of investing in real estate assets:
1. Initial analysis
We must analyse how much money we have, and our financial leverage capacity, just in case we have decided to resource that. If the answer is yes, the profitability threshold needs to be higher than the financing cost. There are much formulas that makes that calculation, being the most common APR and IRR.
2. Study the existing offer
There are no good or bad products, inexpensive or expensive; but ideal or not for our profile. Therefore, depending on the area and very important, if we want to live there in the future, we must choose something that covers those expectations. There are properties that come from Banks in the outskirts of the cities with less demand, that can be acquired at relatively low prices and 100% financed. However, near the city centres, the prices go up, but they are always a safe investment. There are other areas very demanding by students and hospital workers, where we guarantee a high rotation, if what we are looking for is renting.
3. Go by the hand of professionals
For saving time, money and headaches, the ideal is working with one or more agencies, that guaranties that the asset to buy, is in good inhabitant conditions, and specially, we pay most fair price for it. Almost with a total security they are going to achieve a better price than ourselves, thanks to their market knowledge and their negotiation skills. In addition, they will give us fiscal, financial and legal support, for assuring that the operation goes in a fast and safe way. Nowadays, many agencies offer Personal Shopper service, through which we are in charge of everything before, while and after closing the deal.
4. Visiting the property in person before signing
Currently there are systems of Virtual Reality, that let you see the house without going physically to the house, which makes us save a lot of time. However, we always recommend visiting the place before making the reservation, with the purpose of checking if everything that made us make the decision was real.
5. Analysing the legal situation of the property
Also, before signing, it is important to ask the seller for a minimum documentation, that assure us that the conveyance will make in a clear, fast and safe way. It does not have to mean that they are lying or not, but in the majority of cases, they do not realise if there is any irregularity because they do not have expertise. So, if we decide to do it without using a real estate agent service, it is essential at least that the contracts are revising by a person with a minimal knowledge in this matter, such as a layer or even the same notary in which we are going to sign the conveyance.
Finally, I know that in this brief summary, there are not include all the factors involved in something as complex as buying a property, but at the very least, they are all important. According to my vision, this is a minimum to take into consideration before making the investment. Nonetheless, if the asset is an urban house, in the following link you can find more pieces of advice from a previous article about this topic. Nevertheless, I am open for any doubt or any explanation that you consider about this information.
