ARE REAL ESTATE INVESTMENTS MORE PROFITABLE THAN FINANCIAL?
There is a myth that real estate investments generate
low returns and that only financial investments achieve
better returns. Well it's time to break that idea.
It cannot be denied that traditional (or known as passive) real estate investment only
causes low returns. But there are different ways, even more sophisticated, for large
investors to obtain high returns with a much lower level of risk. Here are reasons to forget
about the idea that real estate investment loses a lot compared to financial investment :
2. Progress. Real estate investments have as a quality their ability to resist
strong crises in the markets. Instead, due to uncertainty, financial assets frequently change real
estate funds and stocks.
3. Transactional real estate cost. When you invest in real estate funds
or shares, said cost is already included in your operations and, in addition, the financial
transactional costs are added.
4. Liquidity. Maintaining operations in international markets such as
the United States or Spain allows access to mortgage loans at low rates. In a 45-day period,
it generates immediate liquidity with financing on portfolio assets.
5. Risk-return. Operating real estate assets in markets where
there is a significant amount of conflicting assets below replacement cost and market
value, returns of more than 15% per year and more than 30% per year can be achieved with
low risk of capital loss.
6. Forecast risks. Correction predictions and cycle changes in real
estate markets and assets are easier to forecast than in financial assets. With a control
panel with macro and micro variables for the sector, the period in which growth curves begin
to slow down is anticipated, as well as the time to start a correction process. In the financial
sector, the above cannot be estimated.
7. Exchange rate impact. When investing in the financial sector,
the exchange rate coverage is rarely estimated, therefore a slowdown in financial assets
is very high. The opposite occurs in the real estate sector, where the impact is much less
because it can be adjusted to the circumstances.
8. Market Risk. A crisis in the financial market has consequences in all markets.
In real estate there is the possibility of locating the effect and proceeding to the correction.
9. Forecast in projected returns. Real estate investment is better
supported in the projection of yield because it can anticipate corrections. In contrast,
variable income financial assets face risk levels that lead to low returns.
10. Diversification. The real estate sector has the quality of being able
to invest from portfolios of different types and classes of assets in different markets.
Investing in real estate is an extraordinary possibility of generating returns. It works well. It all depends on the investor not buying and leaving everything in the portfolio, that is, static. It will be a great business for him as long as he maintains active management.