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Fundamental understanding in investing in real estate

Every person pursues financial success and stability. For many, the ownership of real estate is one element shaping that stability definition.
The first advice for investing can be found in the Talmud, which is: dividing your property evenly in 3 parts: a third in money, a third in “product”, a third in the “real estate”.
Even though many people buy that it is not difficult to purchase and lease estate, there are not so many prosperous investors.

If you are an experienced investor, then, as a common rule, you will apply the services of real estate professionals before making any acquisition.
If the amount of investment is not remarkable, then the desire to save paves the road for independent decision-making, without consulting with realtors.

What do you need to comprehend for someone decides to invest or purchase real estate (apartment, house, office) in order to raise the savings or to get income from leasing?

The first key factor is you need to know the location of the real estate market that you are going to invest.
You need to anticipate whether it is growing, falling or pausing.
Our real estate has a short history; From the early nineties until about 1997, it saw a vigorous development.
The price of the first sold apartments bordered on $1,000. It is interesting that a two-room apartment in Kiev in the spring of 1991 could be purchased for $1,000.
Also, the apartment in the center has much lower price than the apartment on Borshchagovka, if not including the presence of repair.

By the end of 1997, the cost per square meter of the apartment in the center touched $1,100.
Then, the first crisis began in our real estate market and it lasted until 2001. During this time, the price per square meter apartment in the center of Kiev dropped to $500-700, which is nearly comparable to the current decline of 40-50%.
In 2001, a rapid rise in property prices kicked off in all segments. In 2008, the average cost per square meter of the apartment in the center reached $10,000.

Pros and cons of real estate investment
Source: ipoteka.in

Using the understanding of the cyclical nature of the markets, we can assume that the current crisis should terminate in a phase of growth and now is high time to buy.

For how long do you want to invest?

Investing in real estate should be a long-term project.
If you consider purchasing property for a period of 1-3 years, this is more speculation and it is only achievable in a growing market.
If you decide to buy in the primary market, you should be expected the time delayed for putting the house into operation, and then repairs in neighboring apartments will take another two years.
Even if you are the first one to make repairs, your apartment cannot allure the potential tenants.
Because the apartment on the secondary market can be rented out faster, the payback period will be shorter.

What kind of real estate income do you want to get?

If you pick the suitable time to purchase an apartment, you can receive rental income and additionally, if the price of your property is rising, capitalization is also rising.
Renting an apartment of an office gives a different income, leading to different prices and costs.


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