Surely you have realized the number of buildings that are under construction and in the process to be built in the Metropolitan Region, suffice it to say that in the first quarter of 2019 there were more than 52,000 homes approved for construction, of that total, more than 46,000 are departments, only in communes such as Santiago, Ñuñoa, Central Station, there are 77 projects, which translates into 18,704 homes.
The city is growing vertically and every day there are more people who rent apartments to live, due to national and foreign migration that is arriving in the capital in search of job opportunities, and the amount of access to different services offered by urban areas.
Mainly, it is the new generations who move and prefer one bedroom and one-bathroom properties, which makes them highly valued, even more so if they are in a strategic location. This type of apartment is also a convenience for the owner since it generates little maintenance costs.
But why are people looking to lease rather than buy real estate? Although the real estate boom is on the rise, crediting yourself as a homeowner is a difficult goal for those without sufficient capital. Due to this context, leasing becomes a more accessible option.
However, there are many people who do have enough savings and capital to invest in a property and turn it into a business opportunity, more now in 2019, where the percentage of the interest rate is at a historic 2%, which allows access to a mortgage loan with greater facilities.
The question now is, is it worth owning real estate? In these times, the answer is totally affirmative since there are all the conditions to be able to do it. The city continues to grow with many housing projects, people continue to migrate to urban areas and credit conditions are being the best in recent years.
Real Estate investor procedure
Due to the increase in real estate projects, having a real estate turns out to be one of the most profitable options to invest, especially if it is in an apartment that is destined for leases.
This business is profitable given the high demand for rentals and even more so if the building is in a strategic place that increases its capital gain, such as near an avenue, subway station, a school, hospital, shopping centre, etc. These factors make the value of the home rise considerably, which translates into a source of asset for the owner’s income.
Investing in a real estate gives the security of having a tangible asset, whether it is used for rent, that property becomes part of a person’s assets, and can be transformed into a heritable asset remaining at the disposal of children or others.
Although it is true that there may be risks, these are minimal. One of them is that the tenant is not diligent with the payments of the rent, and instead of a good source of income, it ends up being a headache. But this type of risk can be avoided by making a good selection of the person to whom you decide to rent the apartment in conjunction with a good property broker who always guides and guides you.
3 benefits of having a real estate for rent.
When thinking about the benefits of having a property there are several reasons that come to mind. They mainly have to do with your capital income, improvements in the quality of life and ensuring a family wealth.
We know that as time is scarce, one of the benefits that can be highlighted is that when starting a business in real estate, it will not add extra work time, rather, if you leave it in the hands of experts in the field, you could delegate the management of your properties and worry about meeting your personal goals.
Here are some of the aspects that would benefit from real estate:
As a first point we believe that the increase in the old-age pension is one of the most beneficial factors. As you know, retirement in Chile is still a complex issue for many people, since when they finish their work stage, they do not have an income that allows them to cover all their needs.
By having a real estate and allocating it for rent, you will be able to receive a permanent monthly income, opening a new source of income from now on, without having to wait to retire to see the results of your investment, instead with the AFPs the result of the investment of all the years worked, you see them only at the end.
You insure the money:
It is better to invest it than to leave it saved since it will depend on the ups and downs of the economy. By investing in a property and putting it up for rent, you make sure that the investment is recovered and that over the years you end up having more income than you already had.
As a result of investment, your capital will increase and thus you will have more capacity to save. If you can save, it means that you have a good management of your finances, which gives you the option of securing your future or that of your children and maintaining the financial stability that everyone dreams of.
Considering these aspects, you will be within the investor profile so that real estate companies like lahore smart city consider you as an ideal person to make an investment in real estate.
In which sector should you invest?
When choosing the property, you are going to buy, you must keep in mind what your goals are with respect to that property. In this case we are addressing the purpose of that real estate being used as a source of income. If you’re aiming for that, these three considerations will help you when deciding where to invest:
Apartment or house:
For an investment, the apartment is the most suitable option. There are many people looking to rent an apartment for different reasons, so putting this type of home up for sale ensures that there will be someone willing to rent it.
Apartments of a few meters:
Small apartments are highly valued, such as those with 1 room and 1 bathroom, since they are more accessible for more people, and maintenance and administration costs for the owner are very low.
You should already know that depending on the land on which the building is located, its capital gain increases, but it is also advisable to have a vision of the future and consider those sectors that have growth potential, so the value of the property will increase over time.
Now, between investing in regions or in the capital, the most profitable option is the city. More than 40% of the population lives in the Metropolitan Region, and with the new metro lines 3 and 6 and future projections for the following lines, the city’s connectivity allows more and new real estate projects to be opened throughout the region.
With respect to the communes with the highest real estate growth, the following can be highlighted:
- Santiago Centre
- San Miguel
- Central Station
These four communes stand out for their excellent connectivity with the centre of the capital, mainly due to the metro stations, proximity to the Central Highway and high commercial activity, which clearly allows the sector to be well valued.
These are some of the aspects that will help you make a good decision when accrediting yourself as the owner of a real estate and that will make your property highly valued by future tenants when you rent your property.
The best stage to buy.
There are several things to keep in mind when buying real estate. We have already talked about the places that have the highest capital gains and the communes where the projects are more profitable to invest, but one of the points that raises questions is at what stage of the project it is better to buy the house.
There are 4 stages of a real estate project that you will come across. Each of them has its pros and cons and will depend more than anything on the requirements that the buyer has related to economic aspects.
Below we detail the advantages and disadvantages of each of the stages to analyse which ones are best suited to your situation.
At this stage the construction of the building has not yet begun, although the real estate company already has the land, it has not yet been approved by the Municipality. This could be considered as a disadvantage, however, if the project is rejected, the money is returned to the investor.
On the other hand, with regard to the advantages, this stage is the most economical option of all, there are more options to choose the apartment with a good location, orientation, choose the floor, parking lot or warehouse. Of course, as the project is still in process, the completions may vary at the end of the construction.
Finally, at this stage the investor could obtain a capital gain of at least 30% to 40% of the original price.
As in presale, you can choose the orientation of the property, parking lots, warehouses, but unlike the previous stage, in this stage the project is already approved and everything is ready to begin construction, although it has not yet started.
Regarding the disadvantages of this stage there is only one, and it is related to the finishes offered initially, these may vary during construction. Now, with the advantages, this stage is the second cheapest and with a higher capital gain.
This stage is not as cheap as the previous ones, but it is still a very good option. In this one, the construction of the building is already advanced, so many people choose this moment when they see that they are already buying something tangible.
Unlike the presale and blank project, this stage has fewer options to choose an apartment with a good location, however there are still good options. The price of capital gains also changes. If in the first stage you achieve up to 40%, in this you only achieve 10%, which is not less.
At this stage the building is already finished. It is the option that many people, due to ignorance, choose because they can already see the building and it gives them greater security in terms of what they are buying, but it is the least recommended option of all.
The value of the property reaches its maximum value, and the expectations of capital gain will depend on the future variables of the place where the building is located. As an advantage, we highlight that the return on investment is immediate.
Conclusions and important points
There are more and more construction projects in the city and there is undoubtedly still land to build houses on, but specifically apartments are the most profitable type of housing today, especially if you think about it to invest in it and then rent it.
The credit conditions are being the most optimal to be the owner of a property thanks to the low percentage of the interest rate, only 2%, which makes accessing a loan at this time very feasible for those who are thinking about invest in Tajarat properties.
On the other hand, the risk of an investment in real estate is the least risky way to invest, although it does not mean that you do not have them, it is still the preferred option of many, added to the favourable conditions that surround this business.
Improving retirement, ensuring money and increasing savings as a result of the capital increase, are some of the benefits that investment in a real estate brings when you use it for leases, which would allow you to improve the quality of life and that of the closer.
There are certain considerations that you must follow before making the final decision to invest in real estate. Such as having a determination and clear objectives of why you want to invest in a property, a good financial education, having a handle on your own finances and considering that you should be in an active work stage.
Finally, the best places to invest in apartments at the moment are the commune of Santiago Centro, San Miguel, Estación Central and Ñuñoa, due to their high current capital gains and future potential.
Now you have the most relevant information to make a well-informed decision. If you need more direction, you can contact one of our advisors and / or download this eBook that shows you the steps to follow to become an investor.