Important information for businesses looking to invest in real estate

Investing in real estate is one of the most popular investments in Lithuania. Not only private individuals, but also businesses direct their accumulated funds here. People and businesses tend to invest in real estate for a number of reasons. One of them is a sense of security. It may seem strange, but when we buy a tangible thing, we feel psychologically safer. However, despite this feeling, real estate investing is really demanding. There are a few important things that every business should know.

Real estate objects worth investing in

Investing in real estate is not the acquisition of property for personal (business) purposes. Only such acquisition of property is considered an investment, when it is intended to receive income from it by renting it or by selling it when the price rises. Therefore, it is best to invest in objects that will really be in high demand: premises for rent, land or forest for sale (if price increases are expected), etc.

However, one should not forget that when investing in real estate intended for rent or future sale, it is necessary to take care of it, to ensure that it remains in demand in a specific market. Often maintenance (it doesn’t matter whether you do it yourself or hire specialists) causes additional costs, so it is very important to estimate how much it will cost and whether the return on investment will be sufficient.

Investing in real estate – a safe choice?

Investing in real estate can seem really safe at first glance. The feeling of security is determined by the fact that money is invested in a physical object that can not only be seen, but also touched. However, real estate also suffers from various losses, so we cannot claim that it is the safest option.

You may remember the Everest sharp decline in real estate prices in 2008, which led to a major economic crisis. This crisis led to a significant devaluation of real estate. Hence, those who invested in real estate before the price drop really suffered.

However, such huge jumps happen extremely rarely – once every few decades, so if you invest wisely, you can really win. In addition, the price of real estate fluctuates much less than, for example, shares, and is much less affected by inflation. So this investment tool has both pluses and minuses.

Real estate acquisition and liquidity

Liquidity is the ability to sell assets quickly and with little loss. Unfortunately, real estate is not very liquid. If you decide to sell it quickly, you can lose a lot of the money you invested – even if you manage to sell it for the same price, you will have to pay a lot of taxes and cover the costs of paperwork. Well, if you don’t want to lose a penny, you’ll have to wait and scramble to find the right buyer.

Investment into debt?

Real estate is not always easy to acquire. It often requires a lot of capital. Loans can be an excellent alternative for business – if you purchase a very valuable real estate object, rent it out and receive a higher income than the loan payments – you will already earn! Investing in real estate after taking out a loan, when the purchased object is rented out, is also convenient because you will be assured that you will have a stable income every month and can use it to cover the loan payments. The best thing is that in the long run you will pay off the loan without even feeling it and the specific real estate object will belong to you!

Uzsak.