Buying land can be very profitable. However, when it comes to real estate investments, there are a number of factors to consider that will help individuals maximize their profit. There are also other factors that will help investors make their investment decisions more easily. Pawel Kentaro Grendys, an expert in the Latin American real estate industry, provides five tips to obtain a capital gain on real estate investments.
Most people know that real estate is a good investment, but they don’t know how to identify the best time to invest in it. Many will wonder what the best time is to invest. For this, it’s important to know and understand the real estate cycle.
This way, investors will know when to enter and when to leave. Explains Grendys, “A real estate cycle can vary from just over a year to ten or more years. Knowing how to identify at what stage this cycle allows the investor to obtain a good capital gain on the purchase.”
But there are also other ways to identify which real estate investment can give excellent equity. Investing in properties that have the potential to increase in value over time is one of the best ways to acquire capital gains.
Although there are many other ways to invest in property, this is one of the most common because it offers investors great flexibility and security. Whether saving for retirement or looking to create extra income, investing in land is a great way to start.
Investing in land is also a great way to diversify a portfolio. This means that if an individual has investments in stocks and bonds, but nothing related to real estate, adding real estate will help him or her balance the portfolio and reduce overall risk.
It is best to buy those properties that are directly related to high-value projects, such as residential condominiums with main attractions, condo-hotels, shopping centers and new infrastructure works. These types of property will be in great demand because it provides security and comfort to people living in the area.
The second type of property is low-value land, which is ideal for developers. This type of land can be converted into residential projects, commercial buildings and industrial estates. Therefore, it is best to buy these properties in areas where there is a high demand for this type of development.
Investors need to always be aware of properties that can be recategorized for another use and that are located in areas where this is likely to occur. There are many ways to find out if a property is susceptible to recategorization.
Investing in land that is in the planning phase or in the middle of construction development can be a good way to make money. This is because the land comes at a low price and can be sold at a higher price when it is finished.
Someone can invest this way by buying land that is in private condominiums, where it is being developed and sold on plans. This means that the investor will not receive title to the land until its completion, but this also has the potential to lead to a higher return on the investment.
It is best to invest in residential land that is in a private community that has main attractions. These could be, for example, an artificial lagoon with crystal clear waters and white sand beaches, recreational areas, sports areas, clubhouses and other attractions that will add to have greater benefit in the surplus value.
It is important to bear in mind that it must be verified that the promoter of the project is reliable, and that it is marketed by a prestigious real estate agency. Also, it must be verified that the construction is active. With all these points, the investment becomes much more secure.
When a property is acquired in or near an area where there has been a recent increase in public or private investment and urbanization that is likely to continue for at least five years, it is a good sign that there will be capital appreciation. “Public and private investments, such as the construction of airports, megaports, office towers and hospitals in the vicinity, may lead to an increase in demand for residential properties located near these new developments,” adds Grendys.
The consequent growth of population and business activity raises the overall value of the real estate in the area. In turn, this creates opportunities for homeowners who want to sell their homes or rent them out at higher prices than they would have received without these new developments.
Researching and identifying investment goals is very important. Having a clear vision of expectations makes it easier to recognize potentially lucrative opportunities. The same goes for real estate. Those who know what to look for can make sure the property has solid value and can offer a profitable return.