There are numerous real estate transactions involving the purchase of a home. Some buy them to sell them, others to reform them and reconverting them into offices, of others exploit them for their own businesses, and finally, are those who decide to buy housing for rent. In the latter case, it is logical that many question: are a good idea really this type of real estate transaction? how much to take to recover the investment of the House that we bought? how much profit can be? While it is true that there are real estate investors who have ruled out entirely the idea of buying to rent, since it would take many years to recover the invested, I must come always is not a far-fetched idea and if we manage well our charts, we can have some liquidity in a short time. Let’s see how you can get profit buying a House to rent it.
Whenever investors pose is to spend thousands of euros in a property, they have to analyze the risks of this type of real estate transaction. You can that you are an individual that has never come to what is a real estate investor, or your goal is actually to make lots of money, but just had some savings and without much knowledge you happened to the idea of buying a flat to rent it and get an income from your tenants.
But in either case, you have to ask yourself what risks has to buy a House to rent it. I ask you some you assess before throw yourself on the pool:
Long time to recoup the investment. Suppose that you spend you €90,000 on buy a house in Madrid. If you rent this House at a price of €600 per month, would many years you takes to recover it? They would pay you €7200 per year, so you printi 12 and a half years to begin to see the first benefits. Are you willing to wait that long?
Not get to rent the floor quickly. When you buy a property, you can pass a long time until you can rent it. During this time, your investment is dead. Imagine that they spend 12 months until you get your first tenant. It means that you’ve been 12 months without winning money, and probably floor costs (IBI, community, etc.) before starting to recover part of the investment.
Loss of the value of the floor. To rent an apartment, you think you have a 5% return. But, and if it turns out that the floor low value over time and you have to lower the price of the rent? You are subject to the fluctuations of the market, since people who rent are also volatile clients, which a year are here and are going to the next. That is, that after having it for a few years rented, now the floor already not worth 90,000, but 72,000. If you ever want to sell it, you must see that you’ve won enough rental more the current amount of the floor to recover the investment and obtaining the desired profitability.
Taking into account these risks involved in buying a House to sell, also have to see what are the advantages or benefits you against the sale of the floor, which is what most investors seek to recover investment quickly, but with some margin of waiting, in case the housing prices go upward , or have decided to improve the valuation of the property by carrying out reforms to increase its value.
In a real estate context where it is difficult to sell, some owners see a way to begin to recover some of the investment, although all have more or less clear that are now a bit poorer than when they bought it in rent. However, rent also has its benefits as well as buy second-hand floor
It is faster to sell to rent. People are thinking much to buy a property, while the rent is much faster. In large cities, is matter of days and sometimes hours because there is little space.
Liquidity is obtained. Can you give equal pay you a lot of money at once or not. You what you like is that they enter you money every month on a regular basis. Then, rental is your thing, since it provides liquidity, while a flat for sale is more difficult to convert into cash.
You can now have profitability. Imagine that, instead of buying the floor directly, you buy it to applying for a mortgage and then rent it. Suppose you pay €350 per month in mortgage and charge €600 a month for renting. You are earning €250 every month, but right now, not in 20 years. However, costs assume you will have to subtract (sometimes the community takes the owner). I read that if you want to sell a House with a mortgage.
With this course, I think that you can see better the risks that it means to buy a flat for rent it and why you can sometimes agree to do so. However, you should analyse your profile as a real estate investor and decide: what I’m really seeking to buy this apartment? This is a good time to make this real estate transaction, or I’ll lose money to buy a property?