Have you thought about renting? Imagine having passive, recurring and monthly income entering your account. While this option looks like a dream, it can be a reality, as long as some precautions are taken. After all, the economy always changes and is often unpredictable, as shown by the coronavirus pandemic.
Therefore, the focus for those who have this objective is to do a great planning and be very attentive to the behavior of the public and the market. So, if that is your goal, keep reading this post. Understand why it is possible to live on rent and the best ways to prepare for it.
Why is it possible to live on rent and how does it work?
First of all, it is necessary to understand that the real estate market will always have demand. After all, people need a place to live, even in the face of a crisis. As the housing deficit in Brazil is very large, it is an investment that can always bring returns.
Speaking of which, the expectation of it is very difficult to measure, as it varies according to the location of the property and several other factors. Still, traditionally, rents for lower classes have returns that can reach up to 1.5% of the value of the same. High-end properties, on the other hand, hardly exceed 0.5%.
As for demand, the market is heated. Research shows that 12 million families intend to buy real estate in the next 2 years, a rate that is similar to the pre-pandemic period. Even during the pandemic, the number of property sales increased compared to last year. Another important factor for those who want to live on rent is to think about the public’s behavior. The millennial generation, which becomes the main consumers, prefers to rent than to buy. In other words, the demand for rent is expected to increase and prices will also increase.
What are the main cares for those who want to live on rent?
While the scenario illustrated above certainly looks positive, there are still precautions that need to be taken by those who want to live on rent. This is a big investment, especially in the long run, which means that it’s not just relaxing and letting the money in. A crucial point for renting is to think like an investor. It does not matter if a property pleases you personally, but its profitability.
So, check out some precautions that those who have this goal should take.
Have good financial planning
In this sense, the idea is not very different from any other investment, it is necessary to work hard in planning for this objective to work. Of course, you need to choose the right apartments, so that you can analyze the return time and the vacancy rate well. While it is occurring, you need to have an emergency reserve. In addition, it is necessary to be aware of possible costs, such as with documentation and maintenance.
Of course, planning is naturally in line with your goal. If you want the quickest possible return, you need to buy a property that is practically ready. On the other hand, waiting can mean buying a property on the floor – allowing you to customize it for your target audience – or for a lower price, which increases the potential for return.
Track changes and industry trends
As mentioned, millennials love to rent, but it may not always be so. Therefore, it is necessary to study the trends of the sector, such as compact apartments. Complementing the “macro” trends, it is also necessary to analyze the smaller ones, such as the kitchens integrated with the living room and even the decoration trends.
This can help you a lot to rent the apartment more easily. Also, it is important to know the most bureaucratic changes, such as the tenant law and how it influences the contract. Knowing this helps to ensure that both sides fulfill their obligations and have their rights respected.
Think long term
The best investors think about the long term and in the case of those who want to live on rent this is also true. Over time, you can invest in several properties, increasing your income potential. In addition, it can, and should, diversify its investments.
Search for properties that are in different locations, or even in different cities. In addition, you can also diversify the type of property in which you have invested. You don’t need to stay only in apartments, you can invest in houses, flats or studios, commercial developments and even land.
Make constant evaluations
Assessments have two main objectives. First of all, you guarantee that you will not pay more for a property than it is really worth. Compare the values that are charged by the region for properties with similar characteristics. Also, be sure to include documentation and maintenance expenses. In the long run, they weigh heavily on your return.
The other point at which assessments are crucial is pricing. As we said, they can vary between 0.5% and 1.5% of the total amount. That is why evaluation is so important. The problem is that the variation is great, depending on the exact location of the property, its state and everything.
As these factors change, it is always necessary to keep the valuations taking place, so as not to charge less than the real value of the property. Of course, the better the conditions, the more it is possible to charge rent. New properties, with leisure areas, furnished and with some difference are more expensive. It is a factor that can help you ensure the highest possible ROI.
As it became clear, living on rent is possible, yes. It is not a process as easy as it seems, in which you just have to advertise the property and let the money in. If that’s really your goal, hiring a real estate agent can make your life a lot easier. She can take care of the whole administrative aspect, including the charges. In addition, it is a great support when choosing the property, since you have a more clinical look and can help you to invest even better.
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