The real estate business has its keys. If you make a mistake on the first purchase, you don't suffer much. Have the same conviction of real estate advisers: everything is sold. You will always find someone who likes what you have, even if it takes twelve months to find it.
The ideal is that you learn quickly and before making the first investment. Look at these keys by multimillionaire real estate developer, Aleksandr Pritsker. By the age of 30, Pritsker is one of the few developers raking in half a million dollars annually.
The expert has developed a handsome portfolio as a developer, and is often seen speaking on platforms, sharing his valuable insights on the subject of real estate development.
1. Profitability:
If you have some money, you can choose stocks, term certificates, treasury bonds, ventures, etc. Or for the real estate business. Of course, the idea is that your money grows over time, is backed by a relatively safe asset, and produces a monthly income, and income. Many people organize their investment portfolio, including real estate. They are considered safe, durable in time, and with possibilities of income and recovery.
Now, what to buy, what offers more profitability?
Typically, properties with higher marketability are more profitable:
• They are the ones that lease and sell the fastest;
• The higher the price, the lower the profitability.
So, if you want to make the best possible investment, do not look for an accommodation in which you would live, look for one that is easy to rent, easy to sell and in an area where demand is high.
Will it be a good business? You can expect a return between 6% and 7% per year, plus appreciation.
2. Accounts and expenses:
What makes a good real estate developer? Pritsker shares that they are someone who is wary of all facts and trust the numbers.
Like any business, you must do some accounts. For example, if you are going to buy with a mortgage, could you take the monthly payment for a few months while you rent it? You will not need to borrow more to pay the credit, that would not be a super good deal.
Like any business, you must do some accounts. For example, if you are going to buy with a mortgage, could you take the monthly payment for a few months while you rent it? You will not need to borrow more to pay the credit, that would not be a super good deal.
Likewise, expenses can affect your profitability. You must take them into account when defining the value of the rent and deciding whether you or the tenant assume them. It should be clear in the contract who is responsible for what.
• Maintenance expenses.
• Municipal excise expenses.
Income tax: It is 5% of the value of the monthly rent, and you must pay it in the Sunat every month, while the contract lasts.
3. Standards:
All cities have constructive norms that define, for example:
• What roads are pending to build;
• What type of properties are heritage and cannot be modified;
• How many floors can be built on a property?
The impact of standards on the value of lots and real estate is immense. Can you imagine if the municipality has a large avenue planned that will go right through the garden of the house you want to buy? Or, what view would your balcony have after they finish building a bridge in front of the building you have chosen? Do you think the noise will affect the value? Imagine that right now you are negotiating a lot near the Lima airport. Are you taking into account that the expansion of the airport is already authorized? It is advisable to consult the rules and required routes of the property that you are going to negotiate in the cadastre office where the property is located.
4. State of the property:
All cities have constructive norms that define, for example:
• What roads are pending to build;
• What type of properties are heritage and cannot be modified;
• How many floors can be built on a property?
The impact of standards on the value of lots and real estate is immense. Can you imagine if the municipality has a large avenue planned that will go right through the garden of the house you want to buy? Or, what view would your balcony have after they finish building a bridge in front of the building you have chosen? Do you think the noise will affect the value? Imagine that right now you are negotiating a lot near the Lima airport. Are you taking into account that the expansion of the airport is already authorized? It is advisable to consult the rules and required routes of the property that you are going to negotiate in the cadastre office where the property is located.
5. Property characteristics:
There are more commercial properties than others. Although there are some that you would like for your life. For example:
• A 200 m2 one-bedroom apartment is a dream. Can you imagine the bathroom in the main bedroom? Now, is it easier to rent than one with three bedrooms?
• Huge commercial premises, with a super showcase and no parking spaces, will be a good business for who.
• Will an apartment with luxury finishes and a maintenance cost of S / 700 per month be easier to rent than one that must pay S / 250?
Price is not the only thing to consider. Evaluate how easy and fast you will move the property on the market.
6. Type of property:
In terms of profitability, a local is different from a home that is different from a winery.
Why? For the cost, of course. The square meters of the premises are much more expensive than those of the house and, they can be more than those of a warehouse.
There are investors who are dedicated only to certain types of real estate. To commercial premises in malls and shopping centers; or to premises in central areas; others prefer warehouses in industrial areas; others, housing. You will have to consider the capital to invest and the risk. Clearly, a local or warehouse involves a higher risk: the cost of not renting is much higher than that of a home. Housing lease contracts are almost always one year; however, in premises and warehouses, they can be five or more.
7. Type of investment:
You have several investment possibilities.
• The typical: buy, rent and after a while, sell. The investment consists of obtaining an income and, above all, a higher sale price.
• Buy, reform, and sell. This business is lucrative. If you are an architect or engineer or you know how to build and reform, it is good business.
• Partner and build to sell: consider that it is not just building. Also, it is to manage, sell, legalize. If you like the real estate business, go ahead.
Bonus tip: Partner and build to rent (very fashionable): coworking offices, commercial premises for rent, warehouses, and even entire housing towers. Throughout the world, this real estate business format is thriving.