Now, when it feels like a crisis is coming, people begin to “preserve” their savings more actively by all available means. In particular, they invest in real estate in order to increase their capital or have a permanent passive income. To buy real estate during the process of construction is a rather difficult and risky way to invest. But the profit from wise investment in the construction of real estate surpasses other methods of obtaining passive income.
Everyone who is not too lazy can earn on the construction of housing and on investing in it – not only the developer, but also a person who wants to become an investor in the early stages of construction.
The cost of real estate varies at different stages of construction. It’s profitable because of the price changing from the beginning of construction and before the object commissioning, the price of real estate is gradually increasing that can vary from 40 to 70%. The price of real estate in a newly built apartment building will increase with the construction of each new floor, approximately in 2-3%.
By purchasing a housing, you can immediately pay for its entire amount and wait for commissioning. But there’s a gradual payment option, the initial price of which you have to pay – at least 30% of the total cost, and then pay according to a previously agreed schedule. It’s preferably to pay the entire amount in 1-3 months before the planned date of putting the house in use.
Choice of investments object
1) Residential buildings: the most common and popular variant. To get income it is enough to acquire a living space and rent it out.
The most popular are 1- and 2-bedroom apartments. For now about 50% of investments go into housing construction, which means that the situation in the country is improving.
2) Country houses (or investments in land): the investment object in demand, which is considered to be the most profitable investment; now more and more wealthy people prefer to live outside the city, away from the noise. But the profit from your investment depends on many factors that you should consider.
3) Commercial real estate: these are office space, shopping and entertainment centers. Not as affordable investment type as the previous one. Investing in this type of property requires even more capital, but they can provide more profit than buying a home.
You will be required to participate personally in the management and constant monitoring, maintain accounts and go to the fiscal office.
This type of investment pays off, as a rule, up to 10 years.
4) Investments abroad: an interesting, but at the same time, complex type of investment, which requires large financial opportunities and knowledge of the foreign real estate market features. This option can bring more profit. But, as you understand, not everyone has an opportunity to engage in this type of activity.
What are the advantages and catches of investing in real estate
Before you start investing in real estate, especially if you do it for the 1st time, review the laws of this investment area, the realities of the market and the characteristics of the main developers of your region.
• it’s a primary residence, that is its advantage;
• loyal prices, interest-free installments;
• always in demand, it’s a fairly liquid asset;
• housing doesn’t lose in price;
• it is possible to buy an object a half cheaper in the first stages of construction;
• you can get passive income after completion of construction – resell more expensive or rent out.
• reliability of the developer
• availability of all necessary documents
• bankruptcy of the developer – «ongoing» and «unfinished construction»
• lack of buyers / tenants – it is difficult to find those who want to buy property at the desired price (due to the financial crisis)
• the presence of a fairly large capital that not everyone can afford.
There is always a risk that the investor will receive their housing later than it was specified in the contract. Sometimes it happens that the buyer receives an apartment with wrong area, so in this way the developer forces you to pay more for «extra squares».
4 main rules for reasonable investment in real estate construction
Carefully choose the developer: read about the company history, its reputation, read reviews about it.
The choice of object: find out the main characteristics, terms of commissioning, the area infrastructure and its prospects.
Ask about the documentation from the developer. But before you should clearly know your legal rights – read the current legislation in this area.
Be careful when signing documents. After the successful conclusion of the contract you will receive property documents.
Investing by bonds
The purchase of bonds is believed to be an alternative to the direct acquisition of real estate. Thus, the buyer acquires the right to own a certain number of square meters.
The mechanism of work.
Two parties take part here – a construction company and an apartment buyer.
As a rule, the developer issues bonds, the value of which is directly linked to the cost per square meter. The bonds give the right to purchase a certain number of square meters in a newly built house. You can purchase the bonds from securities traders.
When you bought the bonds in an amount corresponding to 30% of the value of the apartment, it is reserved for you. When the house is completed, put into operation and you have enough bonds, you can exchange them for dwelling.
Prospects for 2019
Weighing the pros and cons and having analyzed everything correctly, investment in construction is quite a profitable investment of its capital. It is worth investing in the construction industry if you have enough money for it and also have some experience. If the potential investor doesn’t have experience, then it is better to ask for help of professionals. The main thing is to find your investment strategy, with the help of which you will be able to get the maximum income without losing your savings.