Are you thinking of investing in real estate? Check out the main advantages of this sector and see different ways to invest!
Investing in real estate is still one of the most used ways to earn extra income. Whether through rentals or resale operations, the real estate market remains attractive to many Brazilians. Therefore, the main purpose of this article is to explain the main advantages of this type of investment.
However, we don’t stop there. In addition to seeing the benefits of investing in real estate, you will find that there are different ways to do this. We list some of these options and explain the characteristics of each. Know more!
After all, what are the advantages of investing in real estate?
Investment in real estate is one of the safest and most profitable.
1. Financial security
Having financial security means reaching a level where knowing if there will be money to pay the monthly bills is no longer such a big concern. Those at this stage have more autonomy to make investment decisions and to look for good business opportunities, even if it means taking some risk.
One of the best reasons to invest in real estate is that, even in times of crisis, the value of houses and apartments hardly falls significantly. In fact, the trend is for its value to increase, especially when the crisis is over. Therefore, real estate is still considered a very safe alternative for those who want to accumulate wealth.
2. Portfolio diversification
A very common objection to investing in real estate is low liquidity, meaning that it takes longer to convert to cash than in highly liquid investments. This is still true, after all, selling a property is not something you do overnight.
However, one of the most important factors for experienced investors is the composition of a diversified portfolio, which mixes investments with different characteristics for greater flexibility.
Therefore, the investor must seek a balance between investments with different degrees of risk and liquidity. With this in mind, investing in real estate continues to make sense to make up the most protected portion of your portfolio.
3. Real estate valuation
As explained above, investment in real estate does not suffer from strong variations, even in times of crisis. In addition, they tend to experience high appreciation rates as a region develops.
A new neighborhood may not look very attractive at first, but it could become a hot spot in the future. Therefore, the analysis of property must consider the potential for growth of the location. The proximity to commercial areas, schools and universities is a differential.
However, it is also interesting to keep an eye on another market trend for the future. Digital transformation is at work in all aspects of our lives and is already causing changes in our consumption patterns.
Thanks to the internet, you don’t need to be in the busiest regions of a city to have access to essential businesses and services.
Keeping an eye on it, many people are already looking for properties further away from large urban centers. They are people who seek comfort and tranquility. This tends to be reflected in property values in neighborhoods that, at first glance, seem too far away.
Knowing how to exploit these opportunities at the right time can result in excellent value for money. In fact, even the purchase and lease of real estate can be done entirely over the internet.
4. Low risk, greater security
From the previous topics, you’ve probably already noticed that real estate is a low-risk investment, that is, you have high reliability so you don’t lose out.
Remember that there are several ways to start investing in real estate ⏤ we’ll talk more about them throughout this article. Real estate funds, for example, are included among variable income investments. Even so, they still maintain much lower degrees of risk than investing in stocks, for example.
5. Profitability of real estate investments
The best way to get better financial status over time is to look for investments with recurring and passive income. Investing in real estate fits these requirements perfectly when you decide to rent them.
After all, the monthly payments will keep coming into your account without requiring much effort. Just keep the site maintenance up to date.
And be sure to check out: How does investing in the real estate market work?
How to invest in real estate?
Investing in real estate can provide profitability in a number of ways.
Now, let’s go a little deeper into the real estate market to learn about the different ways to invest in the sector. You will see that there are options for various investment profiles:
real estate rental
Buying rental property is the most popular type of property investment. To operate in this market, it is important to be very attentive to the characteristics of the property before the acquisition. Well-located and maintained properties will have a high level of liquidity as they will be very easy to rent.
In addition, it is important to keep an eye on the annual rent adjustments. They must follow one of the indexes used to calculate inflation ⏤ which needs to be described in the lease. Most of the agreements follow the General Market Price Index (IGP-M).
To measure the percentage of profitability of this investment, just divide the rent by the sum of all expenses related to the property ⏤ taxes, furniture, maintenance, possible renovations, etc. It is estimated that a good level of profitability is somewhere around 0.5% to 0.8% per month.
Real Estate Credit Bill (LCI)
The Real Estate Credit Bills (LCIs) bond those financial institutions issue to raise money to be invested in real estate projects. It is as if you lend money to the bank in exchange for a certain return. LCI’s compensation can be:
- Prefixed: when the yield percentage is fixed;
- Post-fixed: when profitability follows an index, such as the Interbank Deposit Certificate (CDI);
- Hybrid: when there is a fixed percentage and an additional post-fixed.
LCIs have lower liquidity than other fixed-income investments, meaning you cannot redeem the amount invested at any time. Therefore, it is essential to observe the so-called grace period, a minimum period determined by the National Monetary Council (CMN) and which varies according to LCI’s profitability.
The shortest term is usually 90 days, for both prefixed and post-fixed bills. They are much longer when the bond is pegged to a price index, which can reach 36 months.
After this grace period, in most cases, the investor is already free to request redemption. However, redemptions made before the bond’s maturity date result in lower yields. In addition, there are bonds that do not allow you to redeem the amount before maturity.
The degree of risk of an LCI is linked to that of the financial institution that issued it. This means that the bond’s liquidity depends on the bank’s liquidity. However, the Credit Guarantee Fund (FGC) guarantees to cover up to R$ 250,000 per CPF linked to each financial institution, limited to 1 million reais, in case any problem prevents the bank from fulfilling its part.
If you are thinking of investing in real estate through LCI, it is important to seek letters from different banks. This way, you reduce your risk considerably, as it is unlikely to see multiple banks failing at the same time.
It is also worth noting that one of the biggest advantages of investing in LCIs is the exemption from Income Tax (IR). Therefore, the profitability obtained with them will not have any value discounted later.
Certificate of Real Estate Receivables (CRI)
The Certificate of Real Estate Receivables (CRI) is a type of security that gives the investor the right to receive remuneration from the issuer. The only institutions authorized to issue CRIs are securitization companies, which use the amount raised to finance real estate transactions, such as purchases and long-term leases.
Normally, the remuneration has a fixed rate and a variable that follows an inflation index. As with LCI, these incomes are exempt from income tax.
Although most of the CRIs are restricted to investors with greater purchasing power, it is already possible to find more affordable options for individuals, with values starting at R$1,000.
CRI is an interesting investment for those thinking about the long term, as investment terms vary between four and fifteen years, without the option of early redemption.
Real Estate Funds
Real estate funds are groups of investors that contribute to each other to pool resources and apply them in the real estate market. Generally, these applications are directed to the construction or purchase of rental and lease properties. The income obtained from this is divided among the participants according to the amount of shares each one has.
Many funds distribute income on a monthly basis. However, they are not classified as fixed-income investments, as the value of shares fluctuates according to movements on the Stock Exchange. Furthermore, there is no way of guaranteeing that a property intended for a rental will always be occupied and generating income.
To invest in real estate, you need to be aware of the market and your preferences.
Speaking of the Stock Exchange, few people know that it is possible to start investing in real estate by buying shares of real estate funds for around R$ 100. But it is important to keep an eye on the fund’s management fees and its performance fee, which varies by fund performance.
As for taxation, the investor pays IR when the value of the shares increases. On the other hand, the income distributed periodically by the fund is free of income tax in three situations:
- When the shareholder has less than 10% of the shares of a fund;
- When the number of shareholders is less than 50;
- When shares are traded exclusively on the Stock Exchange or on the organized over-the-counter market.
Want to invest in real estate? Discover Arbo Imóveis!
Apto’s partner, Arbo Imóveis is a startup in the real estate market that aims to simplify real estate transactions so that connecting to a property is happiness for those who receive it, who deliver it and who manage it.
Thus, it offers services and products for the real estate market throughout Brazil, such as a Customer Relationship Management (CRM) and an application for brokers, and, in addition, it operates one of the largest real estate portals in the country.
Arbo’s differential is the facilitation of real estate purchase and lease processes. For this, it has tools that reduce bureaucracy processes both for real estate agents, brokers and developers, as well as for clients who want to buy and rent properties. Meet!
And be sure to check out the best properties that attract investors!