Is investing in property even worth it? We know the answer!
Property investments – the most frequent doubts
Buying a property involves an investment of capital, often quite large, raised over the years. This is why, before a final decision is taken, an investor considers various options and tries to assess the risk of the operation and find answers to all emerging concerns. Understanding the significance of these actions, we therefore suggest to ask oneself a few questions prior to the transaction, which shall help to make a decision and reconfirm the rightness of our strategy.
What questions should be answered before investing in a property?
• What type and form of investment to choose?
Usually we hear about an intension to purchase an apartment for future rent. However, it is worth remembering that this is not the only option of property investment, which can turn us a profit. Other worth analysing types of investments are as follows:
◦ Transfers of rights - assignment of rights to apartments in the most popular estates and in strategic locations is an opportunity for making a quick profit and return on investment. The formalities are limited to minimum, and the rate of return oscillates between 10 to 20 %.
◦ Flips – you invest in the best offers of apartments that can be later resold for profit. The more the property value increases, the higher rate of return. The period of involvement of resources is quite short in this form of investment, usually up to 6 months, and additionally you get satisfaction from contributing to and designing the chosen interiors.
◦ Investment vehicles - are apartments adapted to maximize the investor’s passive rental income. Ultimately, the property is divided into at least two independent, separate rent-ready apartments. Thanks to this your return on investment comes much quicker, and your resources are securely invested.
◦ Second Home – a place in an attractive location where you can rest and relax as well as profit from it while you are not there by turning it into a rental property.
Wybór The choice of the appropriate form of investment is the first step towards satisfying benefits is can bring.
• What level of profitability would satisfy me?
It is worth to give some thought to a question what return on investment would be sufficient and attractive enough to encourage me to invest my capital in it? We will determine the ROI (return on investment) [LINK DO SŁOWNICZKA: ROE] and the ROE (return on equity) [LINK DO SŁOWNICZKA: ROI], to evaluate whether the given offer is the one to satisfy us.
• Do I know the market and housing needs in the area?
One of the most important criteria for a specific investment is selecting the appropriate location – if we know that a certain place is well connected with other parts of the city, that there is a high demand for properties and rentals nearby, then our chances of turning an adequate profit are much better. It is hence worth doing some good research prior to making a decision.
Is it worth to invest?
Considering the current situation, property investments seems to be one of the safest choices. They react significantly slower to economic changes and appear to be a more predictable form of investment than the other ones. Additionally, every investment can be subsidized by a mortgage, thus reducing the equity and enabling repayment of instalments with a monthly passive income. Just remember to analyse individual investment offers and select the one closest to your plans and income assumptions.
If you are in doubt whether you are up to choosing an adequate offer yourself, seek assistance of a professional company that will help you to find the best investments and guide you through all processes.