Investing in houses or apartments – e.g. for long-term rental – is a safe and effective way to multiply your capital. What real estate to invest in if you want to make money on them?
Investment properties – basic information
Investment property is any property held in possession for the purpose of increasing its value and/or for the purpose of making a profit, either from resale or rent.
As indicated by the International Accounting Standard (IAS), this is what distinguishes it from property occupied by the owner, i.e. held for use for the purposes mentioned above. Investment property cannot be sold in the ordinary course of the entity’s business.
Real estate in smaller towns
If you want to invest in real estate, it is worth considering buying an apartment or house in a smaller town located near a larger city. The price of such a property is much lower than the price of real estate in a large city, and yet it is of significant interest to people commuting to work in a larger center. Living in a smaller town is also an ideal solution for remote workers who do not care about being located in the city center. For tenants, this also means lower rent – as in the case of smaller apartments. Properties located in small towns also attract tourists. In the summer or winter season, you can successfully rent an apartment or house for a short-term period. When deciding on a property in a small town, you can find real bargains – the price can be much lower than the market value of the house or apartment.
Properties from the primary market
When it comes to the opportunities that real estate gives buyers, it is much more beneficial to buy an apartment or house from the primary market. They do not require renovation and are much easier to arrange. Finishing a property from the secondary market, on the other hand, may be much more difficult. The new buildings are adapted to the needs and expectations of residents, they have elevators and other amenities that are simply missing in properties from years ago. New apartments are also often covered by the so-called developer’s guarantee. Therefore, if any major defect occurs, the developer is obliged to make the necessary repairs. An additional advantage is also the fact that buying a developer property can be much easier than buying a used one.
Small apartments
When looking for real estate for investment, investors are now paying particular attention to smaller apartments – e.g. studios or two-room apartments. They are associated with lower purchase and finishing costs, and despite their small size, they are still popular with tenants. A smaller living area also means lower rent. Properties with a relatively small area can still be developed in such a way that they are as functional as possible – and renovation expenses are much lower than in the case of large apartments.
How about living abroad?
A trend that will certainly not lose its popularity for a long time is investing in apartments located abroad. The most popular properties are those located, m.in others, in Italy or Spain, where one of the biggest advantages is attractive weather. Their prices do not change at such a pace as the prices of houses or flats in our country. A functional apartment with beautiful surroundings near the sea is perfect for short-term rental, e.g. for tourists during the holiday season. Stays abroad are also popular among remote workers, who are increasingly willing to embark on the so-called workation – they usually choose private homes rather than crowded hotels.
Real estate from bailiff auctions
Among the properties in which it is particularly worth investing, there are also those from bailiff auctions. They usually allow you to save a lot, and the cheaper the apartment or house you buy, the more money you earn. The starting price, i.e. the lowest price for which a given property can be sold, is often 3/4 of its market value. At the second auction, it can be up to 2/3 of the market value. However, when deciding to buy an apartment from a bailiff’s auction, it is worth making sure that there are no old tenants in it – in this case, it is necessary to conduct eviction proceedings. It is also a good idea to check the land and mortgage register of the property – this allows you to obtain information, for example, about the mortgage encumbrance.