Three Simple Yet Effective Ways To Invest In Real Estate In The Modern World
For 54 years in the US (from 1963 to 2017), the average house prices rose 19 times, from around $20 thousand to around $380 thousand. This circumstance alone makes investments in real estate lucrative. Just to compare, we give below the cost of various investable assets for the same period:
- gold changed from $309 to $1,400 per ounce (+353%)
- Dow Jones index rose from 6,425 to 24,440 points (+280%)
- silver rose from $11 to $19 (+72%)
- crude oil changed from $26 to $56 per barrel (+115%)
- dollar index did not change (0%)
Nothing for the same period showed +1,900% rising. That does not mean that buying a house in 1963, you’d simply watch as it gains price until 2017 without doing anything. Surely, some repairs and renovations are required. But even though you spend a full house price for these during its 50-year life period, it’d still give you a +950% rise at least. Isn’t it still obvious that owning, operating, and flipping houses bring more money than any other asset normally available for a regular person? The long-term price rise is obvious no matter what crises happen.
Below, we’re looking at 3 currently most effective ways to invest in real estate.
Rental properties as primal real estate investing
This is one of the most obvious and possible ways to start being a real estate owner. Becoming a landlord, you can start receiving monthly rent, which would make it possible to accumulate capital and pay for a bank loan, which you might have received to finance this purchase. You could start being a real estate investor of this type if you’re used to DIY towards anything, as the rental property will require a lot of fixes and small/mid repairs. Also, if you’re not overwhelmed about dealing with tenants’ requests, things breakages, and communication issues, then this is your thing. Alternatively, you might hire a managing company but that will eat a part of your profits.
Pros: you can buy several objects at once with bank financing with a humble initial installment from 5% to 25% of the property cost. You can also be geographically diversified (that includes different cities or even states). Cons: a possibility of a large vacancy rate and the need to deal with such issues as repairs, tenants, law compliance, taxes, and possible property price stalling.
Investing in real estate through property investment groups and trusts
One of the ways to receive profits with your hands off the daily management (as is the case with rental premises) is investing in trusts and funds. Basically, you purchase an equivalent of stocks or some other securities, which give you a monthly/quarterly/yearly profit. In some occasions, the profit is fixed; in others, it fluctuates depending on how well the managing company’s doing when it manages the pool of properties under its umbrella. You factually own a part of this pool, which is seen as ownership of some particular apartment/house or a faceless part of a fund, which might manage not only real estate but also other valuables. It also can be a family fund or some online property investment platforms, which diversify their investments, not primarily focusing on real estate alone.
Pros: a small yet fixed & predictable income; diversity of such investment options on the market. Cons: risk of encountering bad fund management or fraud, which only collects but not gives back.
Real estate investment through the house flipping
Real estate investments of this group typically include buying some undervalued, old, or discounted property, fixing and renovating it, and selling it for a bigger price, which compensates fixing + renovation and gives you a margin of profit, including payment of taxes. This option is good for small family-owned construction companies or natural persons, who are simply good in renovations and repairs (however, some types of construction works may still require a license).
It’s advised to consider this option if you do everything with your hands/hands of your paid workers, as then your profit is maximized. If you hire a professional team of construction workers from the side, you’ll significantly decrease your margin of profit (if you’ll have any at all).
In the first and third scenarios, it is also possible to buy and hold hoping for the price to grow up – which is especially lucrative on growing markets. For instance, in rental properties, if you don’t earn anything on renting per se, in 10 years, the average cost of your real estate will grow from 2 to 5 times, allowing making money only on it.
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More about DGY
DGY is a real estate investment and property management company. Our experts have an impressive experience in turning businessmen into smart real estate investors. We collect limitless opportunities throughout the world’s best real estate markets and help our clients implement the best deals. We take care of all due diligence and customize documentation while your income grows. We also provide you with property management services so you can forget about the tiresome maintenance of several objects and entrust this process to professionals.
Investment advice and recommendations
DGY is an investment company that takes care of every client and helps them become successful investors. With the help of an investment experience and a well-thought plan, we will help you examine the market, choose a strategy specifically for you or your business, and calculate future costs to start making money with real estate investment.
In order to invest in real estate, you should consider how you will run your management in Ukraine. DGY will help you eliminate all possible pitfalls at an early stage as a personal project manager will be assigned to your case. They will assist you in choosing the project according to all required objectives.
DGY Investments takes care not only of purchasing property but also renovating an existing one. With the help of a thorough plan and estimating, we will thoroughly prepare a property for sale. Our professionals evaluate an investment property and create a strategy that includes the costs for renovation, possible taxes, fluctuations on the market, etc. Therefore, our clients are able to resell the renovated properties in Ukraine with more than 15-20% profit from the initial price.
Before our clients decide to deal with real estate investing, they consult with our experts concerning details such as the necessary documents needed to purchase a property and successfully run all the processes connected to it.
Therefore, if you are eager to invest in Ukraine, it’s essential to have all the paperwork done correctly, and that’s the moment when our team of experts takes care of this step. DGY Investments helps investors buy real estate property, manage the paperwork, start preparing relevant documents for purchasing realty in Ukraine, and close the deal successfully.
Real estate investment opportunities in Ukraine
When an investor decides to invest in real estate in Ukraine, the most affordable way to attain stable passive income is through buying residential real estate. Investors can expect to receive a regular monthly payment from their tenants at a fixed monthly amount, unaffected by inflation or other unforeseen circumstances. The amount of rental income will vary depending on the size, type of property and location. For example, buying an apartment in Ukraine’s capital Kyiv is beneficial to investors due to offering a large working population, central location and affordable prices. Hence, the minimum price of renting a decent one-bedroom apartment in Shevchenkivskyi District will be around $1000 per month in 2021, followed by Pecherskyi District with a cost of $850 per month. Besides, investing in real estate in Ukraine annually brings clever investors up to 15% of yield, attracting many business people every year.
Properties for investments in Ukraine
Ukraine has a giant sector for real estate investing. Businessmen who come there all over the world often choose between investing in residential and commercial properties. The main advantage of buying property in Ukraine is the affordability of prices on the houses and apartments. For instance, if you invest in real estate in a historical district, a luxurious apartment will cost you around $80k only.
How to invest in Ukrainian Real Estate
In order to invest in Ukrainian real estate, you should take into account a list of crucial factors. The first one is to choose what kind of realty you are going to invest in: residential or commercial. It is vital as it should comply with Ukrainian real estate law. The second tip is to identify the purpose of purchase in order to make a strategy for the property. For instance, you may purchase the property for your own use or buy it for lease. The next step is to calculate the taxes and what kinds of taxes are payable during the purchase, owning, or selling. Also, to invest in real estate properly, you should keep in mind currency control rules in Ukraine to sell a property and get a higher profit.