What To Take Into Account To Make Real Estate Investments?

What are the aspects that must be taken into account when buying a property to rent it and get an income? Key tips

When thinking about real estate investments, the aspects that will impact this decision are entirely different from those that have to be taken into account when the objective is to buy a property in which they will live.

Making investments in Argentina is not easy, but you can. Historically, real estate investments are those that generate more peace and security in Argentines. “There is nothing like investing in bricks,” is a common phrase in our country because, whatever happens, the brick always remains.

How to calculate the rent for real estate investments

The first important point to be clear when investing is to know what is the expected income that will be received. The same must be done when real estate investments are made.

According to the March study of Mercado Libre, a 50m2apartment has an average value, in the City of Buenos Aires, of US $ 130,450. On the other hand, the average rent for this footage is $ 10,500, that is, little more than $ 500 (taking the average exchange rate of that month at $ 20.90) per month. In annual terms, the income that would be obtained is the US $ 6,000.

Then, by dividing the US $ 6,000 per year received for rent divided by the total investment of US $ 130,450, the profitability of a real estate investment in the Federal Capital is around 4.6% in dollars.

The formula to calculate the profitability of a real estate investment: Annual rent/investment x 100%.

Of course, this number may be higher or lower according to the purchase value of the property as well as the price that is rented.

In addition to the annual rental income, investors should know that the prices of the properties – even more so in the big cities – are continually increasing, so that in case that property is sold tomorrow, You would also get a significant gain. As a reference, between March 2017 and the same month of this year, real estate prices increased 15% in dollars.

Tips To Keep In Mind When Making Real Estate Investments

1 – State of the property. When the objective of real estate investment is to rent the park, it is essential to know, in as much detail as feasible, the status of the same. Before making the purchase is critical to see if it will be necessary to make some arrangement or not, what would be the cost of this possible arrangement and the time it would take. If the investment is a department in a building, in addition to knowing the state doors inside, it is advisable to analyze the general condition of the property and, looking at the expense, and you can understand if you are making some “structural” arrangement. “

2 – The type of rent. Many real estate investments today are made with the aim of renting them but temporarily, because the profitability can be quite higher. This decision is advisable to take it before starting to look for what property will be purchased. Also, in general terms, when it comes to a temporary rental, these are usually equipped, so we must consider, within the initial investment, the cost that this equipment will have. The quality of what is put into the house will also have a direct relationship with the final rental price.

3 – Current or future zone. The location is, without doubt, one of the most critical aspects of the purchase of a property. To choose the area where the property will be acquired, it is essential to answer these questions: what public services arrive? What are transportation services nearby? In 10 years, this area has growth potential or is already at its maximum ?. And, it is also good to know if your idea is to sell the property in the short, medium or long term, because if you do not think about doing it in a short time there are always opportunities in areas or neighborhoods that have not yet been exploited, which would allow you to buy cheaper and sell, tomorrow, at a much higher value.

4 – Cost of the property. As the owner of the property, it is advisable to know what the monthly cost of the capital will be for you or your tenant. The value of the expenses in the departments can be very high -especially those that have amenities, charge, and security- and this will affect the rental price. You also have to consider provincial and municipal taxes, such as the ABL in the Federal Capital, which will also increase the value of the property or affect your final income.

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