Real estate investment: An important pillar of the global economy
The real estate market is one of the major contributors to the global economy every year. Because it not only generates a large amount of assets and liabilities, but is also a source of employment for millions of people.
- DAY November 3, 2021
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Pedro Fernández Martínez, president of the Mexican Association of Real Estate Professionals (AMPI), stated that Mexico has become one of the most important countries for investors worldwide. Despite the health and economic crisis, the real estate sector registered a growth of 6.3%, up to the third quarter of last year, in the price of new housing and 5.7% in used housing.
The real estate sector has positioned itself as one of the most important and secure pillars in terms of intelligent investment; thanks to its growth, it represents an alternative to obtain high returns in the medium and long term.
The National Institute of Statistics and Geography (INEGI) reported that as of 2020, the real estate services and rental of personal property sector contributed 10% to the national GDP, equivalent to 2.4 trillion pesos, which could be an important factor in the recovery of the country's economy. global economy.
4 ways in which real estate investment can be exercised
Active real estate investments
This is one of the most known forms of the market, which requires extensive knowledge within the sector, as well as capital to invest. In most cases it is carried out between one or more partners, followed by the purchase of a property and then agreeing on the decision to take. The reforms are usually a very useful and effective alternative, where first you invest in a property, and then make the necessary changes and modifications, which increases its value considerably and therefore manages to get a good income when you manage to sell. Deals with third parties are usually good for both parties, especially if one of them is not skilled or knowledgeable in real estate. One of the parties acquires a property with a lower value than the one he considers he owns and sells it to an investor at a higher price. It can also be used as a modality to sell it to a real estate expert and that this expert gets a client charging a commission on the original value.
Rentals
Rentals are another great way to invest in the real estate sector, in this way an asset is secured and there is a constant income with a low amount of liabilities. When it comes to real estate investment for the generation of constant flows through monthly rents from the leasing of a property; there are three elements that we must take into account at the time of investing.
- GOOD REAL ESTATE ASSET: i.e. the property should be profitable; the rent should cover the maintenance and administration costs of the property, and in addition to that, generate good yields
- AN OPTIMAL CONTRACT: It is the agreement of wills which must contain certain clauses that guarantee the harmony of both parties, that is to say, the payment of the rent as well as the care of the property.
- AN HONEST TENANT: It is one of the most important tasks of the real estate investor to find a tenant who will pay the rent without setbacks and who will diligently take care of the property.
Passive investments
This kind of investment is something different, because the investors are mainly the general public or businessmen, and rarely real estate agents. The idea is to only provide the capital and the experts in the business are in charge of selling, renting and buying.
A fund can be created and should contain capital from one or several partners, by means of a private equity fund through companies, with the objective of using it for the realization of business in this branch.
Online
Online real estate investments are relatively new, where many partners can pool capital to lease, renovate or buy an apartment and then divide the profits according to the capital contributed or sometimes to the work done through the website, using platforms such as Airbnb, Mercado Libre, Viva Anuncios and others.
This proposal allows those who until now were excluded from real estate investments to participate and take advantage of its benefits. It is expected that millennials and small and medium-sized savers will have access to participate through the purchase or investment of real estate through different digital media.
Type of real estate investment properties
- RESIDENTIAL PROPERTY: This is the most common way to invest in the real estate market. Buying a place to live, either a house or an apartment. One of the advantages of this type of investment is that as the population continues to grow, under a stable national economic situation, demand will increase.
- COMMERCIAL PROPERTY: The acquisition of commercial premises and offices is one of the most active parts, so you can generate large profits in the short term. Compared to other real estate investments, it generates higher cash flow production. You can also use certain types of commercial properties to obtain more leases.
- INDUSTRIAL PROPERTY: This includes all spaces used for commercial purposes. One of the positive points of this investment is that it can be used for various purposes, whether as a warehouse, office or production of goods or services. You can also segment and rent the generated subspace.
- RETAIL PROPERTIES In this real estate alternative, variables such as distribution and location must be considered. The latter can affect the success of the premises, since in many cases the level of sales depends on the number of people passing through the place.
- REAL ESTATE INVESTMENT TRUSTS: A Real Estate Investment Trust (REIT) refers to an investment company that owns real estate assets and derives income primarily from leasing them. In other words, they offer shares in the stock market like other publicly traded companies.
Investing in real estate is a smart investment Be part of the growth in the global economy!
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