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Investing in Real Estates for Noobies

The first investment advice we can find in the Talmud. It sounded like this: hold a third of its assets in cash, one-third in the “commodity”, third in the "real estate".

Everyone knows how to buy or to rent the property, but as time and last crisis have shown, there are not so many successful investors.

If you are a serious investor, as a rule, you will use the services of real estate professionals before making a purchase.

If the amount to be invested is not large, the desire to save often forces making decisions without consulting with realtors ...

What should know everyone who wants to invest or simply buy a property in order to increase his savings or receive the income from the lease?

First and foremost, we must determine the condition of the property market, where you’re going to invest.

Is it rising, falling or frozen in anticipation, like it is right now. Whether the views of Realtors on its further development are different?

Our real estate market has a short history, since the early nineties to about 1998, it was growing rapidly. Price of the first sold apartments did not exceed $ 1,000. Imagine that a two-room apartment in Kiev in the spring of 1991 could be purchased for $ 1,000. And the apartment in downtown would cost much less than the flat in Borshchagovka, if it not corresponded, according to real estate sellers, an important criterion - the renovation .

By 1997, the apartment cost per square meter in downtown has reached $ 1,100. then the first crisis on our real estate market began. It lasted until 2001, at the time the apartment price per square meter in Kiev downtown fell to $ 500-700, which roughly corresponds to the current decline by 40-50%. In 2001, the rapid growth in property prices started in all segments. In 2008 the average cost per square meter of the apartment in downtown was up to $ 10 000 ...

Based on the market cycles, we can assume that the current crisis should finish by the phase of growth ...

The next step is to determine the amount to be invested to real estate.

Whether it is formed from its own funds or it is borrowed? For what period of time?

Investing in real estate - it is a rather long term project. If you consider buying real estate in the time period of 1-3 years, it’s more speculation, and it is possible only in a growing market.

What yield from the property you want to receive?

If you choose the right moment to buy a house or an office you can receive rental income and, in addition, if the price of your property is rising, capitalization is also in growth.

Renting an apartment, an office, gives different income, and at the same time expenses will also vary.

How much time are you willing to dedicate to the work?

There is an illusion that if you have invested in real estate, you may relax totally...

It is not correct. You will need to spend a lot of time and efforts on repairs, equipment, management and maintenance of your property, as well as communication with tenants and different services. There will be also differences depending on market segment that you choose. The time and money that spent the owner of the office, residential apartment and daily rent apartment a, shop or land plot, may be very different.

Selection of the segment for investment.

What do you want to buy ... apartment, office, house, land plot? This choice depends only on you, on your experience, resources, desire, preferences and temperament ....

Wish you successful investing!

Shevchuk Serhiy, May 2011

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