Before you decide to pump into real estate, it is worth deciding on what your new acquisitions will serve as: as an asset or liability. If you purchase a property to live in it – then this is a liability as it requires constant investment of additional funds.
It becomes active when it starts to generate income, i.e. – to be sold. Net profit in this case is the difference between the cost of buying real estate and the price of its sale, taking into account the necessary expenses. If the property is acquired for rental, then this will apply to active commercial one.
It includes any object that is on the ground and cannot be moved without causing irreparable damage. The list involves office and residential buildings, objects of unfinished construction, land, etc. A private investor intending to pump must understand the difference.
Commercial real estate involves shopping centers, office buildings, warehouses, industrial facilities, hotels, garages, agricultural enterprises, complexes, subsoil and green areas, catering establishments.
Residential one involves country houses, summer cottages, cottages, apartment buildings.
The mobile market is developed abroad, it includes collapsible frame houses, objects that can be put on a rented site, and on their own land.
According to the legislative definition, they created to receive profit from them are objects of commercial one. Because different departments make them the property.
If you want to equip a housing in the apartment office, workshop or rental space, then you have to transfer property from the category of residential to commercial. Documents can take a lot of time and effort, you also need to get permission from neighbors, utilities and architectural organization, if the housing is in an apartment building.
Investments in residential one are the following:
- a space in the primary market (in a new building);
- acquisition of space in the secondary market;
- purchase abroad;
- a land plot (independent development).
These methods differ in cost and payback period.
Investment have three options:
- Securities will be exchanged for living space upon completion of construction. An investor purchases bonds in the process of construction. With the method of investing a contract for the transfer in the property is at the time of the exchange of bonds.
- The investor pumps into the construction financing fund and receives a certificate of receipt of money in return.
- The investor buys mortgages from the developer (an amount equivalent to the cost of housing). Here it is necessary to conclude at the same time two contracts: on the purchase and sale of securities and on investing.
With the help of the secondary mk. you may pump into in real estate for the subsequent rental. But you should know that prices are growing slowly, but you will need additional costs.
To rent it is necessary to have any apartments. If you buy a housing without renting it, this is a long-term investment.
In each country, you can pump into both the primary and secondary markets. But you better know in advance all the nuances.
When investing in land, it is supposed to engage in horticulture. The second option is the acquisition of a country house. There is the same principle as when buying a home in the primary mk.