When analyzing the performance of an investment portfolio, the most important asset is often real estate. Between 1870 and today, real estate is the best performing investment well above other classes of assets. Residential real estate is currently the most successful investment. The yield measured by rent is 7.05% when the average performance of the shares is 2.89%, that of the bonds of 2.5%, and that of the money market of 1%.
Cyclical changes in real estate are much smaller than those of the stock market, ranging between -4% and 16%, while equities regularly suffer stock market crashes. In the end, this contradicts the logic that performance pays for risk. In contrast to equities, the risk of real estate investments is low, and their return is generally higher. Real estate investment is clearly the most efficient and the most secure, so risk diversification in a portfolio should include real estate investments rather than equities.
The current situation of real estate investment
Due to historically low-interest rates, purchasing real estate as an investment offers an attractive rental return that is competitive with other types of investments. Investing funds in a savings account or secured products like bonds are currently unprofitable. Rental real estate represents the most attractive alternative. This solution offers short, medium, and long-term security performance of your assets. Rents represent a steady cash flow, and the surplus value in resale ensures an increase in your assets invested initially.
The profitability of the property is linked to regular maintenance and pricing rent in just about the market. Ensuring legal framework through suitable leases is likewise important. Improving the property according to the expectations of the rental market and respecting the expectations of tenants will assure you rental success.
Know the market well
It is important to remember that a successful real estate investment is first and foremost the result of market mastery. Real estate is an extremely secure investment if you approach it with seriousness and method. That is why it is important to get involved in your buying process. A company like investment-locatif.ch will help you navigate the process and defend your interests. They will help you pragmatically analyze the potential of investment to avoid adverse impacts, consider yourself an equal with the broker, and negotiate to get the best price. An investment company will also touch with the best-trusted professionals according to your needs: banker, notary, and construction company. Finally, the work of an investment advisor will allow you to evaluate the potential rent and its performance effectively. This evaluation aims to know the property’s situation with an environmental study and obtain information regarding infrastructure, access, transport, and other services likely to interest future tenants. These valuable tips will help you invest in areas with strong economic and professional development that are well-served by public transport. This is the key to solid and sustainable profitability.
To invest in real estate and get a good return, small areas are already enough to generate an attractive rental income. Private investors usually buy a studio or several homes under construction. This allows them to value their dormant assets on the basis of 6-15% according to opportunities.
This type of acquisition makes it possible to start building rental assets that are highly profitable while providing asset liquidity from resale flexibility.
It is important to note the particular interest in investing in PEP. This type of property will allow the cost of the building to be distributed among all the co-owners. Expenses will also be accounted for, giving better visibility to your estimated return on investment. That is why it is beneficial to invest in ten smaller studios in town rather than in a big five-room apartment, especially when the multiplication of assets will smooth the risk of rental vacancies.
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