Investing in real estate is one of the oldest activities known to mankind and therefore, one of the most developed and complex. However, and despite its vital importance, not all people have the basic and necessary knowledge to function adequately in the real estate market and thus procure a property that ensures development and personal satisfaction, as well as generating material benefits.
When we talk about a real estate investment by spotless agency, we are necessarily referring to the generation of profitability, the same that implies the relationship between the benefits provided by a certain operation and the investment or effort that has been made, which is usually expressed in percentages.
In the world of real estate investing, there are three kinds of businesses that are clear, each with their own different rules, conditions, and processes.
The first type of investment is that of capital gain; the second is for cash flow and the third is real estate development. In this sense, the central idea of each of these ways of obtaining financial return is as follows:
CAPITAL GAIN.- It means that from the moment we acquire a real estate asset for investment we have to buy below the market price, so when we sell it we will always win, even if the country’s economy is unstable we will win and we will not lose.
On the other hand, we must also take into account that the value of a property increases as time passes. Some properties increase their value faster and in greater volume than other properties. The key to being a successful investor is precisely to understand and know when to buy a property.
For example, if it is a property located adjacent to a place where a commercial or financial center will be developed, the property will increase in value for the simple fact of being adjacent to the project. In this way, we see how a property increases its value, that is, generating surplus value without the necessary intervention of the owner. Another clear example would be the property located in an area with urban parameters favorable to the construction of large projects.
CASH FLOW.- This means that the property must generate income that is obtained from the rental of the property. And even more, if it were a Free Cash Flow, which represents the cash available once all the investments in the fixed assets and in the working capital necessary to carry out the operations necessary to develop a real estate project have been made; This must be sufficient to cover the maintenance and other expenses required by the administration of the property and still produce profitability for the investor