Have you heard of the different types of real estate investments available? To do good business in this market, it is not necessary to bet only on the strategy of purchasing real estate for rent. On the contrary, today there are different types of investments, which vary according to the amount of money you have to invest and also the levels of risk you are willing to take.
Some of the most common investments in this area are the acquisition of rental properties, real estate investment funds, construction of properties for sale or rent and real estate loans. In general, this is a stable and perfect market for that type of more cautious investor, who does not like to take too many risks.
For you who are interested in the subject, below we list the main types of real estate investments that you need to know, in addition to the basic information to get you started, such as the advantages of this model.
What are real estate investments?
Real estate investments are similar to any other type of investment, in which a financial resource is invested in an asset, with an expected return greater than that which was invested. In this case, the investment is made in the real estate market, which may be directly or indirectly.
How do real estate investments work?
Investments in real estate can vary according to their type, as we will see. Usually, the most general investments in the market are classified as fixed or variable income, due to their fluctuation characteristics in the market. The real estate sector takes qualities from both, because while the market fluctuates, it is a tangible asset, which generates more security.
What are the benefits of making a real estate investment?
There are several benefits when investing in real estate. It is important to keep them in mind when thinking about your goals and your behavior as an investor. This way, you can understand well if this is an option that makes sense to you.
This is one of the biggest advantages of investing in real estate. As it is a tangible asset, it is the sector with the greatest stability from the historical point of view. For example, unlike stocks, the investor will not lose money due to causes related to the market in general. Even in times of crisis, it is a sector that tends to stand out, as during the coronavirus pandemic.
Another advantage of this market is that it has a good potential for profitability. Real estate can be very profitable if the region in which they are located appreciates or if works are done to modernize them or repair whatever is necessary. In addition, rent is a source of fixed and recurring income for a long time. In addition, you can take advantage of market opportunities, such as low interest rates, to lower costs and increase profitability.
The flexibility of the market is also very striking. First, you have the option of selling or renting the property, and you can choose between commercial or residential properties. Within the residential, there are still several options, such as houses, high-end properties or the more compact ones. Because of this, you can diversify your investment well within this market.
People will always need to have a place to live. For this reason, the high demand in the market is yet another very advantageous feature of the real estate sector. In addition, Brazil constantly suffers from a housing deficit, which means that the demand for real estate is always high. No matter the size of the crisis, housing is a basic necessity.
How to make a real estate investment?
To make a real estate investment, you need to first consider your goals and your investor profile, after all, there are some more general disadvantages in this market. For example, real estate is an asset that has low liquidity, which means that it is not so easy to sell when you need it.
In addition, a high initial value is also required to invest. However, with financial planning it is possible to minimize, or eliminate, these problems. Finally, it is crucial to know the types of investments.
1. Rental properties
Investing in rental properties, at first glance, may seem like a very simple business to do. However, it is necessary to consider many details before purchasing an apartment, house, building or even commercial room in order to obtain a source of monthly income.
Start by considering the rental amount that can be proven, as it will be counted as the rate of return on investment over the years, that is, the business needs to compensate. Also make sure that the property in question really has attributes that make it easy to rent, such as a good location, for example.
2. Real estate investment funds
The real estate investment fund, which is also known as FII, works as a joint application aimed at real estate ventures. In practice, it works as a group of people who invest their financial resources in real estate development projects, such as the construction of buildings, shopping centers, among other types of real estate.
The financial return can be through rentals or even the sale of the property, for example. There are several possibilities for making big deals in this modality and one of the advantages is that the negotiations are made by the stock exchange, which facilitates sales transactions.
3. Securities for mortgage loans
Mortgage bonds are divided into two groups: Mortgage Bonds (LCI) and Real Estate Receivables Certificates (CRI). The first type is the easiest to access and it is possible to invest in this modality just by going to a bank. In order to have access to the second option, the investor needs to be part of an investment fund.
Precisely because of the slightly greater bureaucracy and also because of the need for large investments, RCIs are more profitable for the investor when compared to the LCI modality.
Now that you know the characteristics of the main types of real estate investments, always remember that the best will be the one that matches your profile. Of course, the market offers many options, but your preferences should be considered first.
Did you like the post? Do you have any experience with one of the models? So, leave your comment below!