Own housing is a necessity and a dream of many people. When you have your own real estate, a person feels more confident, because in any difficult situation he has a safe haven. For investors, a purchase is not a solution to the housing issue, but an opportunity to increase capital.
In both cases, the further fate of the invested funds and time depends on the correct choice of the object.
Choosing a goal
First of all, you need to clearly define for yourself for what purpose this or that housing is purchased and for how long there is an opportunity to invest money.
In most cases, this is an investment with the aim of:
- preservation of capital;
- generating income from resale;
- receiving income from subsequent renting.
It all depends on the investor and his character, age, security, experience. Ask yourself a question: do you want to save money or increase it?
Consider a situation when a person already has his own home with renovation and he decided to invest his own, not the last, savings, so that they do not decrease due to inflation and currency fluctuations.
If an investor has decided to try himself in the role of a landlord, then even before investing or buying an apartment, it is necessary to decide on a portrait of his tenant. What questions can you ask yourself:
- plan to rent it out on a daily or long-term basis, or seasonally;
- an apartment at what level of rental prices you will choose – for top managers or for young people at the beginning of your career;
- an apartment will be rented by one person or several, if more – it will be a family or people who do not know each other, for example, it may be students who will rent your apartment by room;
- or if it is a married couple over 30, then are you ready for them to be with children or with animals;
- whether you will rent out the apartment to foreigners.
Once you have identified your desired potential tenants, it will be easier for you to find the location where you will consider buying an apartment.
The location of the apartment plays a significant role. Don’t just focus on cost and attractive discounts. If an apartment is located in a place with poorly developed infrastructure and 7 minibus stops to the nearest metro station, it will be difficult to sell it or find tenants.
The yield will differ from the construction phase in which you will invest, or choose a ready-made apartment, and your expenses will be only repairs and equipment with furniture.
The period for which you are willing to invest money can be as follows:
- short-term investment in primary real estate, which will soon be put into operation, or in a finished apartment on the secondary market;
- long-term – investing in “squares” at the initial stage of construction with the aim of resale in the future or leasing.
An apartment in an old housing stock is suitable for immediately renting it out after preparation or renovation.
For resale in order to make a profit, this option is hardly suitable, because if this is a very old fund, major repairs may become necessary, then the amount of expenses for such housing will increase significantly, and the cost of an apartment may decrease over time.
The recoupment of such an apartment for rent takes on average 10-12 years.
A new apartment in a new building is more expensive than all options, there will also be additional costs for repairs, furniture, appliances. You can order repairs from the developer, but you should not count on perfect quality. There is also a high probability that you will have to redo it.
The disadvantages include the fact that, due to the coronavirus, rent has fallen in price, many tenants did not work during the lockdown, did not have the opportunity to pay for housing and returned to their cities.
Rent is relevant for those investors who seek to save their money and understand that they will receive at least a small but stable income. The landlord must quickly react to changes in the market, then the apartment will not be idle.
The disadvantages of investing at the beginning of the construction of a house include the risk of running into long-term construction and the need for a detailed analysis of the documents of the seller of the apartment.
More and more developers set higher prices at the beginning of sales, which rise moderately until the end of construction – in this way they avoid speculative investors who form a kind of competition for them in sales.