We are living in an era of investment, and real estate is one of the best options for those who are looking for a safe way to increase their assets.
There are many ways to invest in real estate and with different returns and risks, so today we want to show you 3 different ways to invest in real estate:
RESIDENTIAL PROPERTY: this consists of buying a property to rent it out in order to obtain a monthly income. This includes houses, flats, garages, commercial premises, among others.
Advantages
It is a safe way to invest: prices do not vary as much as other financial assets.
It is a low-risk investment: the real estate market recovers over time.
Investors obtain a recurring source of income through renting.
Disadvantages
Requires a large initial investment.
It is a long-term investment: investors cannot sell the property quickly if they need liquidity.
It requires proper management: the investor will have to take care of maintenance, rents, taxes, among others.
FLIPPING HOUSE: Consists of buying properties with the aim of improving them and selling them at a higher price. "Renovate and resell".
Advantages
A good return can be obtained in a short period of time.
A significant profit can be made if the property is bought and sold at the right price.
You can set up your own business based on renovating and selling properties.
Disadvantages
Headaches and the time investment involved in refurbishment.
There is no guarantee that the property will be sold at the expected price. In addition, the time and work involved in fixing up the property can be very time consuming.
There can be a great risk if the necessary precautions are not taken to check the area and the condition of the property.
VACATION RENTAL: This is the renting of a property, flat or room temporarily for the duration of a holiday. These houses and flats are rented on a short term basis through online platforms such as Airbnb, Booking, HomeAway and others.
Advantages
Higher profitability compared to traditional rentals.
Advance payment, as the rental payment can be made before the guest enters the property, so there is no risk.
You can enjoy your property for as long as you want, you only have to block the days you are interested in.
Disadvantages
Complex bureaucratic procedures for approval, such as the tourist licence.
Income is not recurrent, as it depends on holiday periods.
Requires more work, as you, a partner or an employee will have to manage the maintenance of the property.
In conclusion, to invest in real estate we must know all the types of investment and methods that exist, and focus on the one that best suits us and our objectives. We hope that this blog has given you some clarity in identifying the different types of investment.