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All about real estate investments to generate income
I will explain in this article how to generate income with wonderful real estate investments . How can you dive deeper into the world of real estate and real estate ? Go for it.
You can always start with some discreet housing and sencillita 
Shredding well . In the worst case, the property can be knackered at the end of the contract. If you've got a gang of hooligans , or your tenant has a dual personality and dresses only good when you hired ... Well then, it has touched you; It does not happen rarely but it can happen. Solution? Again, damage insurance.
Imagine that you noticed an estimate of gain on property of € 10,000, for example. That is, buy a good, you spend € 60,000 (so to speak) and want a gain of € 10,000 more, over time or reform. Imagine that is over time. At the end you will have 70,000 (we ignore taxes).
It is very easy to think that if writing (or worse, the owner) said that the local has 150 square meters, that is. Nobody is going to think that someone has eaten meters, right?
That is, you do not need financing.
There already have the first sablazo.
I personally really like the world of real estate investments for several reasons:
Despite the crisis and speculative bubbles (which always are and always will be) the I consider myself a fairly safe investment, as well as others . The reason: falling on necessities. You may not need a solution that offers a new startup or an ingenious mobile application , in the same way you may not need to go to the movies or read a book, but always need a roof to live (or as some say, a roof drop dead ).
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Moreover, these investments allow me a plurality of forms of monetization. I can lease the property or sell it , for example. The first is passive income and capital gain second (speculation, others call it ).
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It is also the perfect retirement pension . If you still think you're going to charge government yours, you can read the article link above. I think we have a leased property is a great pension, and they do not need to wait to retire to collect it . You can do it from now on .
Finally, it is a type of investment that easily allows the delegation: you can entrust a professional search for properties, although the final decision will take you, you can trust managers, lawyers, corporate reform ... So if this type of investment It puts you a lot of nerves because you do not look CAPACITY @, do not worry, delegates, there are people who take care of everything, no need to procrastinatemore.
I, as I say, is something I practice and I encourage you to do, if you know a little of what you've been up to . So let's look at the main issues to consider if you want to devote to this type of investment property .
We started.
How do you make money with real estate investments?
First, it may seem patently obvious, it is to have a property .
If you do not, you must buy it , and that, I recognize, it is the main obstacle to be found with those who have less capital. But it is like this; this is an investment in which, unlike others, need capital to start, own or borrowed. If you already have debts , of course, it is not your thing.
However, there is a solution if you do not own a lot of money: real estate crowdfunding. It is the purchase of a property by a number of people giving small amounts. You can invest in real estate projects in this way through the most popular platform, Housers, or through another: Bricks & People .
If you count all the capital you must decide. Property about many kinds: houses, shops, garages, storage rooms, warehouses, urban land, rural plots ...
You can always start with some discreet housing and sencillita
The ways to profit with these properties may be several:
Lease No. 1 well
It is the classic course of life rent. You have a property you rent and receive a generally monthly income.
It is one of the quintessential passive income, easy and simple, every month the money in your account. Now, you can also meet with drawbacks, mainly 3:
Maintenance of the property . The tenant calls you with the heater does not work, the blind is broken ... it is not continuous, but it happens. Solution? Damage insurance, a maintenance company or person you trust to you to call every time something happens. Problem solved.
Risk of default . The tenant fails to pay. How do you solve?
- Insurance defaults.
- previously examined the signing of the contract the solvency of the lessee.
- Demanding additional guarantees (a bonding person, for example, to sign the contract in addition to the tenant).
Shredding well . In the worst case, the property can be knackered at the end of the contract. If you've got a gang of hooligans , or your tenant has a dual personality and dresses only good when you hired ... Well then, it has touched you; It does not happen rarely but it can happen. Solution? Again, damage insurance.No. 2 Resale good
The second way to monetize the property , although not passive, is resale after a while. The capital gain would be that we discussed earlier.
This can occur in several ways:
First, by the mere passage of time.
Things generally go up in price. The CPI rises, life goes and real estate is no exception. As I say, it is "generally". You can have the bad luck to buy when it was more expensive than ever and having to endure a crisis of several years. Still, eventually, I'm almost convinced that the price recovers.
Secondly, reforming and selling.
Here you do not need to wait years; within months you can resell good if you have renovated nice and you have improved in some way. A good, worse than it was before, is now better and therefore worth more.
Third, just by luck.
Later we will see the subject of negotiations in the price when buying. Now we have to point out is this: there are people who negotiates price and people who do not. People who before seeing the apartment is already saying "I offer both" and people who are embarrassed to say: "I could lose 1,000 euros?" So here involves a little luck. If you manage to find a property whose price get lower substantially at the time of purchase, and sell it to someone who accepts the price (top) that will take notice without more, without negotiating, since he has won the lottery. Bingo!
No. 3 Lease well running or what's inside
In this case we are talking about properties that meet any of the following characteristics :
- Utilities have inside (eg furniture business if it is a cafeteria), or
- They constitute in itself an operating unit (for example, running a rustic land with fruit production)
In these cases the property has an extra utility and therefore the price of the lease is greater, or you can reach other agreements (a percentage of production or profits).
And now, a great strategy when investing in real estate or real estate
If you like peace and stability, it is clear that the ideal is to make one or more goods and lease. You perceive a recurring amount without excessive shocks.
If you are more interested in the movement of money and go increased guarantee you, yours is to acquire properties and try reselling them for their gains. Now it is very easy to make a mistake in this case.
Imagine that you noticed an estimate of gain on property of € 10,000, for example. That is, buy a good, you spend € 60,000 (so to speak) and want a gain of € 10,000 more, over time or reform. Imagine that is over time. At the end you will have 70,000 (we ignore taxes).
If with these 70,000 € you ever do the same operation, other property purchases by 70,000 and you look again gain another 10,000 €, you're not winning another 10,000 €. You're making the same 10,000 € and you are always at risk (because the sale of the property may stagnate).
Ideally, you asides the first 10,000 won and 60,000 buy again. 10,000 won these can then invest them elsewhere:
- Something innovative or risk;
- Go making a bag when you have enough, buy another property;
- Go creating a savings plan , making contributions;
- Etc.
This is a great strategy because you diversify and multiply your chances of income. The other is always at risk and think that every time you win more when it is not.
Tips when purchasing a property to invest
Well, if you've already decided that real estate investments are your thing (or at least want to dabble and try them to see if they make money ), I will personally give you tips always apply.
No. 1 Endéudate only if you have very clear
It is true that other people 's money (debt) is a great way to leverage , but do not be blinded by greed or to come up. I would rather think with his head. That, to me, implies borrowing only if:
1. You economical. That is, if interest rates are low and transaction costs are assumable. I would never do, for example, it is to pay two or three times what it costs me the property, because then you're working for others ( autoesclav itude ).
2. Accounts with stable and recurring sources of income, you can spend an amount to pay debt. That is, if you can only invest your money (which you get plenty of that) to get more money. In this case, for example, would not enter the perceiver a normal wage for very stable regardless of their work, however fixed to be in your company, and this is because the job future is very, very uncertain and the market professions is changing at breakneck speed.
3. consequence of this, your life is not affected, your quality of life, your comfort level, your personal freedom , your economic independence ... by debt that you contract. You go on living just like if you had loan. I do not think it good choice to exchange happiness for investment.
# 2 Even if you go to buy only one property, you can examine all
This already said Robert Kiyosaki, bestselling author of Rich Dad, Poor Dad , but it is also a matter of common sense.
Whether you go to buy one property , you have to see a lot and compare. Although the seller encourage you to decide and (because it has many deals and you can lose it !) Take your time, do not rush, examines everything that meets your requirements, ponders the decision and after some reflection decided.
# 3 The area is essential
And I do not just mean the more central, more value and better (also more expensive). That's a no - brainer. I mean if you're going to spend, for example, a home to rent, you should consider which areas are more potential demand. This is also said Robert T. Kiyosaki and is also fairly common sense. Areas with student or working population, for example, defendants can be good places.
No. 4 but not always cheaper is best
Price is not the only factor to consider. Other considerations feed. If the property is knackered and must reform it completely, maybe the end result you face (or maybe not if you already have the right professionals and make you special prices).
I always believe that when something is cheap for a reason. Nobody usually give their properties, so if you see that in an area are at rock bottom prices, inform yourself well, maybe there are plans to install a great nuclear store .
.# 5 No manifest your enthusiasm
Which it could also be translated as you can not see the duster.
There was a time when I had a real estate company and taught myself homes. I always drew attention people as you opened the door began to rave. "I love it, it's fantastic, just what I was looking for, how much space, what color so beautiful ...!". Sometimes the husband (or wife) looked askance and wanted to say "You're charging the negotiation"
For that, you do not carry trading.
# 6 For yes, we must always negotiate
Even if you think the price is a bargain and that the owner has gone mad, always negotiate. Maybe for you it's a bargain but the owner has doubts whether or not sell at that price. There may be increased considering the initial price negotiations will come next. So, my advice: negotiate.
No. 7 But do not overdo negotiating ready or be disrespectful
That means no why speak ill of the property, in the area ... or why tell the lady on the street in front of you homes that you want cheaper.
So, first it is disrespectful, and secondly does not provide the negotiation. You know what if it is supported? Humility.
If you say you love to pay that price, but unfortunately you can not because you lack the sum, you'll trigger a change of consciousness in your partner and everything will be easier. The seller will see that you want but can not and obviously if you can not no sale, so maybe you say, "Well ... let's see what we can do ... " Bingo!
" Bingo!# 8 examines the various legal documents for housing
We must not take for granted that things are as you say. Not because they want to deceive you (at least always), but because we all make mistakes.
Well the thing is complicated because the same property may have different legal documents and not coincide with each other. In Spain, for example, each property has a deed, one registration, cadastral certificate ... And may each say something different in terms of area, location, etc. You have to see that everything matches or, at least, that the discrepancies are not disturbing or incapacitating.
# 9 Checks the ability to sell owner
I explain. As a rule nobody will sell what is not theirs. But you can find cases where the owner, who believed to be the legal and sole owner, it is not.
Because it has full possession, but not legal ownership, that holds his dead sister and still have not settled the inheritance, although he did not know that ...
Because the deed is the absence of ratification by a nephew who lives in Mexico and also was incapacitated, so you must sign a legal guardian whose address not know ...
Multiple assumptions. Not always be the owner who believes it is 100%.
# 10 examines the planning regulations
Especially if it comes to land, within the legal documentation it plays an important role planning regulations. Know if the land is developable or buildable and what percentage, for example. Know if the area expected to pass the new ring road ... All that, at least in Spain, is in town halls. And clothe yourself with patience (at least where I live )
)# 11 checks in reality the surface of the property
It is very easy to think that if writing (or worse, the owner) said that the local has 150 square meters, that is. Nobody is going to think that someone has eaten meters, right?
Despite that, my advice is that before signing, midas and you verify that it is indeed the surface. If the field is smaller, you can always negotiate down the price or rethink the purchase.
# 12 A when signing respects the legal minimum price
What does this mean? Is there a legal minimum price? Not one can sell at the price you want?
Yes, everyone can sell at the price you want, but generally public bodies (at least in Spain) means determine market prices or minimum prices to be respected when settling taxes.
This is quite unfair, to say that is an outrage, but there is . You can sell your home at half market price if you want, but when liquidating tax must respect the legal minimum price because otherwise receive a surprise in the form of registered letter. And you know, if you're at home and your wife yells at you from the door: "Honey, certified letter hacienda" , no need for you to ask: "But what is good or bad" No certified letter hacienda it is good !
# 13 The power of intermediaries
Intermediaries are realtors that teach and offer the properties in the portfolio.
Some people, usually very petty and limited mentality, fleeing from them because "commissions fall and steal". Not that fees remain, is that they charge for their work like any other. And it's not being robbed; rather, they can do just like anyone else unscrupulous, but it's not something that's going to be in office.
A broker can provide you with the task in multiple ways:
- Saving you time. You will directly offer the kind of property that meets your criteria, avoiding you walk around the city without knowing many times what you'll see.
- Making it easier for the firm. It will collect and verify the legal documentation, collect the minimum price of administration, will organize the firm would notice ...
- Saving you money. Yes, saving money, because when trading is not the same delegate the work to someone experienced to face your Sun @ to the situation: "This ... lady ... I wanted to say ... but not altered ... is not altered ... why are you going away? "
If you follow the above criteria I'm sure you get good acquisitions. Time and practice will doing other, but there is something we can not ignore and that we must discuss.
I mean this: the real problem of investments in real estate .
The real problem with real estate investments
I do not know if you may have guessed, but the real problem of investments in real estate are taxes .
As anyone can guess if you see the reality, the purpose of any government is to get money to citizens.
To get it you just have to respect two requirements: I clothe a nice name (not call theft, but taxes, contribution to public services ...) and tell people (the adocenadas masses) that is for good. If you get a beating, but they say it's not a beating, but a mere physical contact in order that you are better (and it's for your own good), the masses, groggy for hours of TV and football, tend to believe it and pay.
Well, actually almost all we paid though not belong to this illustrious category.
In the case of real estate investments , more if possible, the problem is called taxes.
Let us distinguish two cases, and always keeping to Spain (if any reader of another country knows its legislation in this regard, I would appreciate if the share in the comments).
A. Of course you have the money to purchase
That is, you do not need financing.
You have saved money and that money purchases. To begin with, that money you've earned with your work or other investments you've already paid taxes and what you have is what you have left after payment, which in strict logic you should not pay anything more. Have money, you paid taxes for it, that money is yours, then do with it whatever you want.
But no, it feels but after paying you have to keep paying. How often? Let's look and see that the state predatory voracity knows no bounds. But it's for your own good.
The purchase of any property is subject to VAT (value added tax), if first acquisition, or the ITP (Transfer Tax), if second acquisition. The first is 4% (social housing) or 10% (other cases) and the second between 6 and 10% depending on the region.
There already have the first sablazo.
Once purchased, by the mere fact of having owned a property, you pay each year to your town hall (Property tax). Why? To have it. But I've already paid. Well, you pay more.
In addition to your annual income tax you should record the good and the state a small percentage of its value will be. Again? Yes again. For the same? Yes, the same. Goes on and on, we have not finished.
When you go to sell, you pay again for the benefit you get. Again? No, not again, several times, because you pay several times for the same benefit:
- The state, in your annual income tax return, you pay for the benefit obtained by scale, but on average approximately 20% currently).
- To your town hall, again, you pay for the increased value of the land (if urban). In some places it is known as goodwill, and the absurdity reaches the point where, until recently, and would remain so if not for a recent ruling of the Constitutional Court, was paid not only if you obtained that benefit, but if not consider obtaining, by the mere passage of time. That is, the tax is called "tax on the increase in value of land ...", but you pay even if you have increased, although losing bands.
If you do not sell good and I want to leave an inheritance to your children when you die, do not worry, they will pay again for the same when you happen to better life (Inheritance tax). If you want to avoid give it while you live, there is no problem: tax donations. But I've already paid for that good (and not once!). I repeat it; back pay.
(Ironically, if you are buried in a cemetery for the space occupied housing also pays tax on real estate, meaning that after death You still paying!)
B.- course you need endeudarte
If you do not have money and ask for a bank loan, the state sees that receive money and also wants a little. They call Tax stamp duty (there's nothing like putting things pretty names). Is between 0'75 and 1'5%.
The reason for this tax? You get money and the state wants a part.
This tax is paid in addition to all the above, ie not replacing any of the above taxes. In the worst case, you see, in the mere act of signing you can now find a higher paying 10% of the purchase amount.
Apart, of course, of notary fees, registration ...
But ... you do not come the downturn because, despite everything, I still think that investment real estate is a great option. Now if you do not want the state Plucking you need to sharpen your wits. And here I can read! :).
More information on investment in real estate
If you want to become a true professional matter, in my work 100 Income liabilitieshave a section devoted exclusively to investment property . You will find a casuistry with detailed assumptions of various properties and links to model contracts and documents that you may need.
So ... what do you think this type of investment ? I'd love you to tell me in the comments. Remember even if you become an expert can always create then a guide or tutorial about it and sell it as infoproducto on a blog (we are in the era of knowledgeand human talent ). And in any case it is something you can simultanear with other forms of investment: bag , savings funds , art, gold, franchises ...
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