To decide how much, what and how to invest, you need to determine your goals, resources and risk profile (determine your attitude to risk). First of all, answer three questions:
Psychological willingness to take risks: do you perceive risk as a threat or as an opportunity to make money?
Financial Capability: what is your budget, do you want to use leverage?
Goal setting: how much do you plan to earn?
Real estate options:
Buy a fully ready-to-rent property – residential property or commercial space in major shopping and economic centers.
Buy a completed property and invest in renovations to increase capitalization and rental value. This can be supermarkets and shopping malls, existing leased space, residential properties.
You are willing to take a risk and want to earn more. It is worth taking a closer look at value-added projects. The essence of the strategy: buy, improve, sell more expensive. Or buy the property, increase its value, rent it out for several years, then sell it.
This strategy requires your involvement and participation. You will also have to think about hiring a management company and a team of specialists: a lawyer, a tax consultant, builders. And consider the risks, such as higher repair estimates, long sales, and time-consuming paperwork.
You are willing to put everything on the line, and you have the material, physical and psychological resources to do so. Pay attention to development projects. This strategy is for those who want to maximize profitability. Such a project can bring from 10% per annum and above. But the profit depends on the stage at which to exit the investment. At different stages – different profitability. This plan will only suit experienced investors with a team of experienced professionals.
What to invest in
The most liquid type of real estate – micro apartments, studios and small one-bedroom apartments. They are always in high demand: many people want to live comfortably, but are not willing to pay a lot. Such real estate is always quick to sell, quick to rent, quick to buy. Advantages – a relatively low cost, high demand, good profitability, high liquidity.
The hotel business can be unprofitable, if you are not a pro and had no experience in this field. To get a large income, the case will have to be handled independently and purposefully. It is not reasonable to invest in a hotel 20 million euros to get 5-6% per annum. The advantages – a variety of proposals (restaurants, hotels, offices, warehouses, nursing homes), a good income, subject to a professional approach and personal control. At the same time, the risks here are quite high, liquidity is low, there is a high entry threshold and dependence on external factors (economy, politics).