The classic property has been a popular investment for centuries for the most part, but is it still the best solution?
Something very important that you have every good asset management is diversification. The old adage “do not put all your eggs in one basket” confirms this strategy.
Many Latin Americans are born with brick already in mind and more and more homeowners and there. This means that a large part of the assets are already in residential real estate. Is it still profitable to invest more in residential real estate? What are the pros and cons, what are the alternatives?
What are the advantages of investing in residential real estate?
Residential real estate understands by all types of properties (apartments, houses, rooms …) that serve as the main home of a family group.
This property always provides a few basic certainties:
- The population continues to grow
- The number of households increases and consists of fewer people
- Space is increasingly scarce
- Urban policy will become increasingly stricter and more concentrated
- The ideal protection against exchange rate risk of local currencies
- The permanent link with inflation
If you look at the residential real estate market in recent years we see a steady growth in the prices of family houses as houses and apartments. Only the country houses or rooms have lower growth;
This confirms another basic rule when investing in real estate,
” It is always better to invest in cheaper properties. The rental yield is relatively higher, more tenants who can rent and there is a greater potential for capital gains. ”
In short, there are enough benefits to consider additional investment in the residential property sector. In the coming years there will be enough tenants and also, effective protection of their capital against inflation is created.
What are the disadvantages of investing in residential real estate?
The reason why many investors fleeing classic property is that the current law protects the tenant, not the owner and ensures that the owner has little control over their property. You can not make a tenant without the intervention of lawyers or trials. Even if the tenant decides not to pay or cause damage to your property is an administrative burden and can take a long time for your property back in your possession or to its original state.
Many “good tenants” disappear rental market because usually those who pay on time and leave their property in good condition almost always already have a good income. With a suitable loan and these tenants can buy their own property within a short time and therefore stop renting your home after a certain time. After too many tenants who cause problems or delays in rent payments.
Many individual investors are reluctant all these headaches. Fortunately, you can also invest in properties that are not subject to the laws protect the tenant. Did you see has been in a hotel without paying? There are different types of properties that operate with several advantages and disadvantages. Depending on your investment profile (budget, risk, term) there are several options such as:
- Vacation home
Residential real estate is an excellent solution if you find good tenants. It is still a very good investment in the long term as demand for quality apartments remains.
If there are several potential problems with residential real estate…
A bad tenant can turn your investment into a nightmare. The laws that protect the tenant also make it difficult to change the amount of rent.
For those reasons should only choose this classic investment in the residential real estate if you are willing to invest time and capital.
Properties to choose it is always best emerging regions look good with planning improvements in the near future. What kind of infrastructure is planned for the neighborhood? What are the strengths of this region? Why would more people come to this region in the future? What political parties are in power and what are your plans for the region?
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