4 ways to invest in real estate for a private investor in 2022

In recent years, an increasing number of people are thinking about investing as a way not only to save accumulated funds, but also to increase capital. And indeed, in most cases, a bank deposit, to which the older generation is accustomed, loses to modern investment tools, especially against the background of inflation and crises. Depending on the level of income, investors invest in everything from stocks and bonds to cryptocurrencies and esports. A separate segment prefers real estate both as a way of sole investments and as a tool of diversification. There are several relevant ways to invest money in real estate today.


What kind of real estate to invest money in

First of all, it should be understood that this type of investment will be relevant for those who are ready to invest money for the long term. In order to decide which real estate is better to invest money in, the investor should decide on his goals:

  1. Saving your capital. The economy and the crises taking place in it testify that real estate is a “hard currency”. And if you invest at the stage of recession, you can not only save, but also increase your capital. The main thing is to choose the right liquid investment object.
  2. Passive income. Suitable for those who already own a vacant property or plan to purchase it for the purpose of earning money by renting or hiring.
  3. A speculative scheme. A long-known strategy: buy cheaper, sell more expensive. In this case, the most important thing is to find a liquid object in the primary real estate market, including at the excavation stage, or in the secondary market in order to improve and profitable implementation.

Having decided on the strategy, you can choose the most suitable option how to invest money in real estate now.

Purchase of real estate for subsequent rental

This option can be considered as a way to generate passive income. Investing in this case involves investing in the purchase of a ready-made object, which can then be rented out. In comparison with other investment methods, renting out real estate does not promise a lot of income, since rental rates have fallen significantly recently and will most likely not rise soon.

In addition, profitability is influenced by factors such as the condition of the purchased property and its location. On average, they earn from 10 to 70 thousand rubles a month on rent, but this is in a successful scenario. Other investment tools allow you to earn more, but the risks are higher.

Приобретение недвижимости для последующей сдачи в наем

At the same time, for those who choose this method for the purpose of reselling real estate, there is good news: prices per square meter are rising, so you can make good money on the difference in value.

Purchase of real estate at the excavation stage

This option of investing money in real estate has always been attractive by the difference in the cost of an apartment at the initial and final stage of construction. This could be up to 50%, however, with the introduction of escrow accounts, the situation has changed. Developers no longer need to actively promote at an early stage of construction, which provoked a drop in the difference between the cost of real estate at the excavation stage and the cost of the finished object.

Покупка недвижимости на стадии котлована

Nevertheless, investors on resale can receive up to 15% of investment income, but this will be the limit. In this regard, it is possible to advise those wishing to choose such a method of investing funds to pay attention to possible prospects. In particular, the area in which the object is being built, whether the infrastructure is developed in it and what is the transport accessibility.

Investing in mutual funds

A relatively new way of investing for the CIS market, which is an association of investors under the leadership of a management company, the advantage of which is that there is no need to independently analyze the real estate market in search of the most profitable investment option.

Инвестирование в ПИФ

To date, the segment of mutual funds specializing in real estate occupies 30% of the total volume of mutual funds and is available to both qualified and private investors. The entry threshold for the latter is relatively low. If desired, you can find lots for holders of small capital, but most prices start from the mark of 1 million rubles. At the same time, mostly management companies invest money not in residential, but in commercial real estate. The investor’s profit in this case is the difference between the initial value of the lot and its value at sale, which can reach 15-20%. Expenses are made up of the amount of remuneration calculated from the value of net assets, which varies between 1.5-3%.

Rental real estate funds

Rental funds function by analogy with mutual real estate investment funds. Just as in the previous case, the real estate acquired by the fund is insured, but unlike the first option, it is able to generate regular income. The scheme of operation of the rental fund is as follows: the fund attracts investors, invests their funds in the acquisition of large commercial facilities, for example, retail space, warehouses or offices and rents the acquired space for rent. As a result, investors have rental income and pay the fund the remuneration due. If desired, the investor can sell his share to other investors and thus earn.

Рентные фонды недвижимости

Owners of medium-sized savings can invest money in real estate through rental funds, since the entry threshold is several hundred thousand rubles. At the same time, the shareholder can count on a permanent income, the value of which varies in the range from 4 to 12% per annum. If compared with bank deposits, the profitability of this method of investment is higher, but far from the highest.

Is it worth investing in real estate now

So, we have considered the main areas of investment in real estate, which are likely to be relevant today and, with the right approach, will bring income. However, the real estate market is constantly developing and new, more attractive areas for investors may appear in the future. For example, the plans of large investment companies include the formation of a mutual fund for redevelopment. The latter involves investing not in the purchase of ready-made real estate, but in the effective conversion of existing ones. As a result, an object reconstructed for a new purpose can increase its value by 2-3 times, and the return on investment can reach 25% per annum.

Стоит ли сейчас вкладывать деньги в недвижимость сейчас

Whether it is worth investing money in real estate now, every investor should answer for himself, depending on his capabilities. If the holder of capital has a certain amount on hand, and does not know where to invest it in order to save it, then with the right choice of a liquid object, real estate can become a profitable option. But if you plan to earn money at the expense of borrowed or last-minute funds, then it is better not to take risks, but to find sources of additional earnings for the accumulation of investment capital.

In conclusion, we add that there is no single way to invest funds that is suitable for all investors. Everyone makes their own choice depending on the degree of risk and expected profit. Investing in real estate is not new in itself, the market is developing and it is possible that fundamentally new directions will become available to potential investors in the coming years.

Published: 25 March, 2022

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