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The wealth is not only built on the basis of savings and constant income. Investing in real estate is one of the best ways to build a source of wealth that allows you to live much more comfortably and with a greater stability. In this article, we will share with you valuable tips to invest intelligently in real estate.
Have you heard the phrase "don't put all your eggs in one basket"?
Surely yes, and that is why you have developed an interest in investing. One of the greatest advantages of investing is the ability to diversify your sources of income, by investing in real estate, stock market, investment funds, pension plans, gold and precious metals, etc. Multiplying your savings via investments in real estate is a key step for those seeking financial stability.
If you have considered investing in real estate or have been trying for some time, then do not forget these tips that will help you throughout the process:
1. Define the objective of your investment
There are different ways to earn money in real estate and it is important that you focus on one of them instead of trying to cover all the methods. Below are the strategies you may consider for your real estate investment:
- To buy a property and resell it: it is about acquiring properties at the lowest price and then selling them when their value increases - thus your profit would be the difference between the two.
- To rent your property: you can buy a property and rent it on a short or long-term basis, thus earning the price of the monthly rent.
- To remodel your property and to sell it: some investors are dedicated to buying properties, remodeling them and selling them at higher prices.
2. Be patient with the return on your investment
To invest in real estate does not mean to see profits the following month. In fact, in any of the 3 mentioned strategies of real estate investments the capital gain is received after a few years, especially if you are buying a property with a bank loan. You may want to read more about considerations when investing in real estate in Mexico specifically.
3. Do not go into debt to invest
One of the main mistakes that people who want to invest make is to not be realistic with their financial situation. To start investing in real estate you may already have some capital saved, but if this is not the case and you need to request financing, you must be sure that you can face the payment of monthly installments.
Otherwise, not only will you not see a return on your investment, but also you can fall into a spiral of debt that is very difficult to cope with. You must invest an amount of money that you are "willing" to lose, that is, that does not represent a very important amount of your finances. In this case, if something goes wrong, your stability and that of your family will not be in danger in the medium term. To learn about different financing options, check our comprehensive guide on ways to finance the purchase of apartments in Tulum.
4. Analyze the real estate market
Knowing how to invest in real estate requires a great willingness to learn, since you will have to thoroughly investigate the real estate market, including its strengths, weaknesses, opportunities and threats.
Analyzing the market will enable you to understand which investment properties to buy and what investment strategy to pursue. For example, a property in a beach town like Tulum will offer you a great return on your investment if you use it for vacation rental purposes.
5. Be careful with all legal details
You cannot imagine the size of losses that an investor can have just for missing out on a small, but very important legal detail about the property that is being acquired.
Do not forget that between 6% - 7% of the value of the property should be put aside to cover notary and tax expenses, which comprise closing costs on properties, so keep all the legal documentation in order not to overspend in this regard. Before investing in any property, you should verify certain legal details about it:
- Is registered in the Mexican Public Property Registry.
- Has favorable tax status.
- Offers a property deed, that is delivered upon the sale of the property.
6. Invest in real estate projects in demand
To invest in real estate does not always mean to buy the most attractive properties even if there is no market for them. Letting yourself be carried away by these types of emotions can lead you to spend more money on the maintenance and promotion of a property that is not in demand.
Big cities do not always represent winning investment opportunities. You would be surprised to know all the possibilities that growing towns like Tulum present for you. Discover all the opportunities that the real estate investment in Tulum offers.
It is advised to do a research of the location where you want to invest – this will also let you understand what type of property will appreciate or sell faster there. In our guide on best cities to buy property in Mexico you can get an idea of what the most demanded and growing cities of Mexico are.
7. Buying in presale
There are many reasons to invest in properties in presale. Without a doubt, their high profitability level is one of the main reasons that should motivate you to do so. Presale condos in Tulum are between 15% and 25% cheaper than finished projects.
Besides, financing options of a presale property are more flexible as an investor has the time till the project is finished to complete all his payments. In addition, one can customize the property, choosing materials and finishes.
8. Choose well the real estate agency or the developer
When it comes to making decisions about your investment, you must have a real estate agency that can clarify all your doubts and concerns, especially if you are just starting to invest in real estate. Make a research of all possible real estate agents in the area, compare opinions and prepare a list of potential questions - until you find a company that gives you confidence and security.
Choose a professional developer of real estate in Tulum that will answer each and every one of your questions about the real estate market and will help you make a smart real estate investment in Tulum.
After reviewing key tips on how to invest in real estate, you may want to learn more about the steps to buy property in Tulum. Understanding the purchasing process, legal requirements, and financing options can help you make an informed decision and secure your dream investment in this sought-after destination.
