We know that real estate investments are one of the wisest financial decisions. We could say that it is a classic that never goes out of fashion.
Years go by, new ways of doing business come and go. In the meantime, those who have been able to join the world of real estate, enjoy their capital gain.
There are many ways to make real estate investments: there are different types and scales. In this article we will see what are long-term and short-term investments. What differentiates them, advantages and disadvantages and how to know which one is best for you.
All about real estate investments
We all have some idea about how the real estate sector works. However, it has its peculiarities. Therefore, the first step to be a good investor is to be informed.
Real estate investments are those that involve the purchase of land or real estate property with the objective of generating income. It is clear.
This investment can take the form of a home, a property for commercial use or even an industry of any kind. The important thing here is to know how to exploit it to generate profits.
The ideal type of investment for each individual will depend on several factors. Among them:
- your interests and objectives
- your budget
- your risk profile
- your time horizon
When is the right time to invest in real estate?
The truth is that there is never a bad time to invest in real estate if you know how to recognize good opportunities (or trust a good real estate agent).
Market fluctuations determine when is the best time to make residential or commercial investments, or whether long-term or short-term investments are appropriate. Buying real estate is never a bad idea, but it is essential to be well advised.
For that, there are professionals exclusively dedicated to discover and develop business opportunities. Their job is to reduce the risks and margins of error through personalized advice based on a deep knowledge of the market.
If you are interested in receiving real estate advice, do not hesitate to consult our experts. In the meantime, let’s get down to business: what are the pros and cons of short- and long-term real estate investments?
Short-term real estate investments
Attention characterizes this type of investment, as it involves leaving everything on the field. It requires exceptional attention to market fluctuations.
Short-term real estate investments are those intended to turn quickly into cash. The intention is to quickly recover liquidity. Normally, the purpose is to reinvest the gain, but it can also be a one-time deal.
An effective way to make this type of investment is to buy a property in pre-sale in order to sell it again at the next stage. In this way, you take advantage of the exceptional price that these projects have in their early stage and quickly recover your investment.
Benefits
- Return on investment in 2 years or less
- Possibility of quickly generating a large capital gain, in case of pre-sale investments
Disadvantages
- Demands more attention
- Increased volatility
Long-term real estate investments
Strategy, planning, patience, audacity. Long-term investments imply an important projection into the future and require less risk aversion.
Before taking this step, you must make sure that you will not need the capital in the near future. You can always sell the property you have acquired in case of emergency, but in this type of investment the quick sale will not be as profitable.
Long-term real estate investments are common for people who decide to place their wealth in their family’s future for inheritance purposes, for example. In these cases, homes are usually purchased. But the benefits of this type of investment go far beyond that.
Long-term investments do not translate into profit only through the sale of the property in the distant future. The rent here is the great ally and can ensure a recurring income, something very valuable in the context of uncertainty that unfortunately hits the economy.
Benefits
- Preservation of assets over time.
- Generation of passive income through rent.
- If it is a good investment, the profit can be higher.
Disadvantages
- Return on investment is slow to come.
- It requires property maintenance.
- In case of renting it, it requires management resources.
Which one is more convenient for you?
Regardless of the type of investment you choose, it is important to stay informed about the state of the market and the particular property. Keeping an eye on the life cycle of the property you choose is the key to discovering opportunities and making good deals.
That said, the convenience of one investment modality or the other will depend, as we have already said, on many factors. The main thing is to think about your objectives and resources.
You may want to translate your capital into a patrimony that will ensure your future wellbeing. In that case, long-term investment is your answer.
However, if you are looking to quickly reproduce your capital through a less complex business, you should not hesitate to make a good short-term investment. In this case, we recommend you to be aware of real estate developers’ projects that allow an early investment. These properties see their value grow very quickly.
Is this your first time investing in real estate? Or you may be too busy to dedicate yourself entirely to this business. In any of these cases we strongly recommend you to work with a master broker agency.
Trust the experts to get the most out of your investment. Their job is nothing less than this.
Conclusion
Real estate investments are always a good decision if taken with attention and strategy. There is never a bad time to invest as different markets and areas fluctuate: when one type of opportunity closes, another is booming.
Both long-term and short-term investments have their advantages and disadvantages. You will have to see which one suits you best.
The important thing is to pay attention, get informed and understand what your investment objectives are. With this in mind and with the help of expert real estate advisors, the capital gain is assured.
At Dreambuilt we offer consulting services, real estate marketing, property management, in addition to building the best luxury projects in the Riviera Maya.
