Real estate investment – how to position yourself best
Supporting the idea that investing in real estate is a great decision is the fact that one of the most common forms of investment is precisely real estate. This type of allocation of available funds is present both in our country and abroad, and it seems that the real estate market is currently experiencing an unprecedented expansion. Increasing demand inevitably drives property prices higher, which is why now is the right time for this type of investment.
What to pay attention to first
Investing or saving through property purchase? Both answers are absolutely valid and, most importantly, profitable. Investing in real estate, or a form of saving through property acquisition, comes with many advantages, among the most important being that real estate is a “currency” most resistant to inflation. However, what should you keep in mind?
As with any investment, the question of profitability arises. If, after running the numbers, you conclude that investing in real estate is a long-term profitable solution for you, then there is no reason to change your mind. However, if you plan to purchase a property through a loan for which you would need to pay monthly installments that should be covered by the rental income from the newly purchased apartment, it is wise to carefully examine all financing costs.
A cash purchase is certainly the ideal solution, but this is often not the case, which is why buyers turn to banking options. Therefore, the calculation of the loan installment together with all associated credit costs on one side, and the expected monthly rental income on the other, are the two factors that determine whether a real estate investment is (un)profitable.
Once the decision to invest in real estate has been made, in the case of purchasing an apartment (more on what real estate includes will be discussed later), which will later be rented out, consider your target group—what kind of tenants do you want? Would you prefer to rent the apartment to a family or a couple, or would you rather rent it to students? If you choose the latter option, it would be wise to buy an apartment in one of Serbia’s university cities, as this increases your chances of having tenants at all times.
Also consider whether you want to rent out a furnished or unfurnished apartment, as any investment in furnishing directly affects the rental price. For student rentals, furnishing is essential, since most students coming to larger cities for studies do not yet have their own furniture and are always looking for furnished apartments.
What types of real estate exist
When it comes to types of real estate, we will mention the three most common types of properties that people invest in: apartments, commercial spaces (including halls and warehouses), and arable land.
Real estate investment most often involves purchasing apartments for the purpose of renting them out or selling them after renovation. However, investing in commercial property or land with the intention of finding tenants can also be a profitable solution.
Regardless of the type of real estate in question, location is a major factor in demand and therefore plays a key role in determining both rental income and the sale price.
New construction or older properties – which is more profitable?
If we now focus solely on purchasing an apartment as a form of real estate investment, you will most likely face the question of what is the better choice—buying a newly built apartment or an older property?
Older properties do not necessarily mean that the apartment requires a complete renovation or costly adaptation. There is a possibility that the seller has already invested before the sale in order to offer a property that does not require additional investment. At the same time, if you determine that renovation is necessary, you should carefully consider the approximate cost of renovation and whether it is financially worthwhile.
Precisely because new-build properties do not require any form of renovation or repairs, apartments in new developments are often in high demand.
Renting or reselling?
This dilemma can be considered the second key question you will likely ask yourself. Do you want to sell the property you are investing in, or rent it out? Which option seems better to you?
Is it the most popular and most stable form of investment?
If we agree that real estate investment is the most popular way of investing financial assets, do we also agree that it is the most stable form of investment? Is this type of investment capable of preserving the value of invested money the most and ensuring its return (either through sale or rental) at the moment the owner feels the need? Can the same property, if necessary, also be used for personal living when the owner decides they no longer want to rent it out?
Yes!
We believe that this form of investment is highly profitable, and for that reason we expect it to remain relevant for a long time, due to all the benefits it offers.
How to invest in real estate wisely
To ensure that your funds are invested in the best possible way, we recommend carefully considering every decision and putting all investments and expenses on paper. Once you make the calculation, you will know whether to choose renting or selling the purchased property and in which way you can achieve higher income from your investment.
Once you make a decision, be sure to hire a real estate agency with sufficient knowledge and experience to make the entire process of selling or renting the property as easy as possible for you.
