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Myths and truths about real estate investing

Having received free money at their disposal, most people think about how to save and increase the amount received.

Moreover, almost everyone wants to receive passive income, putting in as little effort as possible and only counting the profit received.

Investments in real estate are considered the most popular; there is advertising from all sides that real estate is constantly growing in price.

In addition, having bought an apartment or house, you can rent it out and also receive additional income without particularly straining.

But all this looks quite tempting unless you experience the situation firsthand.

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Is it true that real estate is constantly becoming more expensive?

Yes, this statement is partly true if we consider domestic real estate and prices in Russian rubles.

But if you approach the assessment creatively, you will notice that if you take the price per square meter in Moscow in dollars, then there is simply a record collapse:

From $4,300 per square meter, the price dropped to $2,800, which means the losses are colossal and it was more profitable to simply store money in foreign currency.

But, you can buy an apartment abroad; everything certainly becomes more expensive there, for example, in Spain.

Yes, in recent years, real estate prices in this country have begun to steadily rise by several percent per year, but before that they were falling just as steadily, and therefore no one can guarantee you that you will not be at the beginning of a new decline.

In addition, in Spain there is a practice of taking over empty apartments and when you arrive after a while you may find your apartment occupied by new tenants.

After years of court proceedings and large bills for a lawyer, as well as wasted nerves and health. The situation with buying real estate in other countries is not simple either; in some places it is simply not sold to foreigners, and in some places you will have to pay quite a small tax upon purchase and an annual tax on ownership.

One of the exceptions, perhaps, is Poland, where a foreigner can buy a home without any hassle, and the amount of taxes per year is around $0.25 per square meter. And the price of real estate in Poland has been growing steadily lately.

What is the situation with the problem of housing for rent?

This is the option considered by those who dream of passive income, because it is so profitable to rent out housing and receive money for it:

First, you should calculate how profitable it is:

An apartment worth $100,000 brings a maximum net income per year of $3,600, and you should subtract:

• The realtor's commission, usually the equivalent of a month's rent of $400.
• Insurance – about another $100.
• Rental tax, at a minimum it is 300 dollars from our amount.

And that’s 3600-800=2800 net per year, and this despite the fact that your apartment will not be empty, the tenants will not run away without paying or you will not have to do major repairs after them. You should also take away the expenses incurred when purchasing the real estate itself (tax and commission of a realtor, notary).

That is, in the first year, at best, you will break even.

If you take into account the above information when purchasing investment property, you should carefully consider how profitable it is and whether it would be better to choose a more profitable and less problematic option for investing money.

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