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How to make real estate investment highly profitable?

(Updated: 5/30/2019 10:09:34 AM)

Real estate investment is a difficult field, so you need to equip yourself with the necessary knowledge before going to the "battle", avoiding investment movements. Here are some ways to invest in real estate that CafeLand synthesizes for small and medium investors.

Investment in rental apartments
This method of investment is quite suitable for those who have idle capital sources, are less mobile, do not require capital turnover. Investors themselves in this way prefer safety, less risk.
The advantage of this investment method is to create a stable income stream, low risk, investment capital is not too large compared to investing in residential land or villas. At the same time, the value of real estate is also likely to increase over time.
To increase assets, investors who apply this method often use their own capital to invest in 2 apartments and borrow a third apartment (borrow about 30% of the value of the apartment). They then use the monthly rent to pay this loan.
Currently, with the income from leasing ranging from 0.5 to 0.7% / apartment value, the possibility of capital recovery will take 5 - 7 years (not including many apartments will increase prices by the times).
When investing in this way, the first factor that determines your success and ensures your capital flow is always circulated according to your expectation is that you need to understand the capacity of the investor. A reputable investor will push the project to comply with the schedule and quality of apartments as committed.
However, the best option for you is to choose completed projects because you can rent immediately after completing the purchase and sale of apartments. In addition, it is recommended to select apartments located in large-scale, synchronous projects on infrastructure and services.
Investment in "surfing" style
Compared to rental apartments, investment in "surfing" is preferred by professional investors because of the ability to "profit" in a short period of time. However, the higher the profit, the greater the risk, investors must have a certain understanding of the real estate market if they want to invest in this segment.
Normally, investors who participate in "surfing" tend to prefer to invest in the land due to higher liquidity and the ability to make extraordinary profits.
In order to be successful with the type of surfing investment, investors not only have a firm grasp of liquidity ability but also have to know all information about investment areas or projects (selling price, planning and price increase ability). , risk, "bubble" status, "virtual" soil fever ...). In addition, investors should avoid legal land or projects that are not transparent and restrict the use of financial leverage.
Those who are successful with this type are often the investors who have updated some less known information. Therefore, if you are not sure or are not professional enough to assess information, do not invest in rumors or follow the movement.
Investing in the form of "sub-plot sale"
This type of investment often requires large capital and requires professionalism in relatively high investors. Investors need to have a lot of experience in the field of real estate investment and civil construction. However, in the current market context, many small and odd investors have quickly flown up. thanks to capture the market's taste.
Some knowledge and practice that investors in general, small investors and individual investors in particular need to consult before conducting investment in this form:
Understand the administrative procedures on land (conversion of land use purpose, separation of red books, construction permit, planning, fees, disputes, purchase and sale, land acquisition, ...) and firm knowledge of real estate valuation;
Know how to use financial leverage appropriately. Most businesses or individuals investing in this way use loans to develop projects. However, it is necessary to calculate reasonably to ensure the ability to repay the debt as well as recover the project's capital;
Only invest in areas with good liquidity. An important principle when investing in this form that investors must always remember is "the rotation of capital is more important than the profit margin."
High liquidity, legal certainty
Whether you intend to invest in real estate in the center or in the suburbs, good residential or agricultural, apartment or town house, or even a villa, the first criterion to consider is liquidity. The liquidity of a project can be understood simply as the ability to convert into cash from that project.
The selection of good real estate location, hence the high liquidity provided by the project not only ensures investment efficiency but also easily recovers capital when necessary.
Suppose after you buy that type of real estate, you try to ask yourself the question: right now, if you sell, will someone buy it right away? Maybe the answer is no. Even if you need money, you're willing to lower the price, so is there a buyer right now? The answer may still be no!
It is easy to buy, but it is difficult to sold. In particular, if you intend to borrow money from banks, acquaintances to invest, it may be long or not known to ever generate revenue. After that you will feel impatient because the property does not increase in price, no one buys and every month still has to pay interest.
For example, some suggestions for you are as follows:
Real estate not too far from the center (or crowded place) in the range of 3 - 10km often has good liquidity. The reason is that people will accept to move within this distance, with this radius, customers only take 10-25 minutes of travel. That is considered a real consumer demand.
When it comes to real estate, there are usually two basic needs: consumption and investment. When the market goes down, the demand for investment may disappear and there is only consumer demand. If buying real estate is not too far from a busy place, even if the market goes down, consumer demand may still be available at this time and you can still sell your real estate, ie traded real estate, be released out of the market.
Many people lost money or staked billions of dong with the main reason being to buy real estate in a place too far from the center, where there is no consumer demand. Some other real estate prices are too high, not suitable for many people, so when the market goes down, it also loses liquidity.
Therefore, the first question you need to ask yourself is: if I need money to sell immediately, will anyone buy it? Or: Is liquidity of real estate high?
Besides, legal factors are also important. It is important to find out if this land is in planning, clearance. Because nowadays, there are many projects in the country being deployed and cleared for construction of roads, bridges, markets, schools, ...
In fact, the real estate in the planning area is still allowed to buy and sell and go to the normal red book name, but the economic damage to investors is definitely existed. You need to remember to carefully check the legal information of property by asking the cadastral commune, ward; Department of Natural Resources, District or competent authorities, experts knowledgeable about real estate, ... before conducting a deposit or purchase transaction.
Generate profit right after buying
With this type of investment, you first need to ask yourself whether you are buying cheaper than the market price? Or are you buying with market prices and expect prices to rise in the future?
Assuming that real estate has market price (common ground price) is VND 1 billion, you can buy at VND 800 million; or the market price is VND 5 billion, you buy for VND 4.2 billion ... At this time, the difference between the price you buy and sell after deducting other losses is considered interest and interest level. This is formed at the time you buy. If after the sale, the expected profit level may be two or three times higher than the purchase depending on the market, your needs and your business ability.
Generating interest right after buying can be interpreted as always buying lower than the market price. However, the mistake of most people is often to buy with market prices and hopefully in the future will raise prices.
In some cases, after the purchase is completed, the real estate market goes up and you earn extra money when you sell. But the smarter investment thinking is to generate profits right after buying. Through this mindset, you can make money even when the market goes up and down. For a down market, you should choose an area with high liquidity, so that you can buy cheap now and sell it cheaply, but still be profitable.
Focus on cash flow, capital gains of real estate
If you buy the property, build a house and have a tenant right away, it is called a cash flow. If your property is close to schools, industrial parks, hospitals, ... you can do business in a business that generates money right away, which is also called a cash flow.
And vice versa, there are many places where you have finished buying, built up for rent but no one comes to rent or do business, that place is called no cash flow.
The capital gain factor is simply understood as assessing the potential of the real estate price increase. There are real estate positions you buy at a price of approximately 40-45 million VND / m2 and after 3 - 7 years, the increase or decrease is negligible, such as increasing from 45-50 million VND / m2. And there are other real estate positions, you buy at a price of 3-10 million VND / m2, also after 3 - 7 years, the estimated increase is 5-6 times higher than the original (VND 20-50 million) / m2).
Another factor is that, where already developed, real estate prices will often be relatively stable. But in developing places, real estate will continue to enjoy the capital factor, so where do you choose to buy now?
If you make the wrong choice, your money won't proliferate. If an asset cannot generate cash flow, it is considered that you have failed business, or that it is "dead property, dead cash flow". Many properties in the inner city no longer have high interest rate elements and vice versa, and many assets are too far from the center without cash flow elements. You are an investor, if you want to invest successfully, make sure you have a clear understanding of these factors, both to avoid unfavorable investment, and to avoid creating legal risks.
The last thing is that you should not forget to invest in the expertise before investing in real estate. Whatever you do, you need to carefully research relevant information and specialized knowledge, understand the actual market resonating with the ability to observe sensitivity and good thinking foundation. At that time, you will succeed!


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