Real Estate Investment: All You Need to Know

The dream of most Brazilians is still to buy their own home. But the real estate market goes beyond this idea. When it comes to real estate investment several products are related to the real estate sector, such as land, projects, ongoing or unfinished constructions, contracts, mortgages, among others.

Due to the good real estate appreciation over the years, many buyers appear on the market seeking to invest in these products. Upon taking possession, these investors can sell, rent, barter, and other activities that generate financial return. Because it is a long-standing practice, this sector is seen as one of the most profitable and traditional markets that exist.

If you are interested in the subject and would like to know more about the real estate investment market, read on!

How to become a real estate investor?

Investing in real estate is one of the first steps toward a promising career. Entrepreneurs looking into this area consider favorable factors for building a solid asset. Safety, potential for appreciation, constantly rising demand, and the chances for diversification are the main attractions.

The most traditional way to enter the market is through the construction or direct purchase of real estate. However, there are other investment modalities, such as rentals, real estate funds, and bonds. But thanks to the modernization of the economy and the growth and development of the financial market, new ways of investing have emerged, and several of them are linked to the financial sector.

Because of this, investing in real estate securities and assets has become increasingly attractive, surpassing the idea of direct investment (real estate construction), because the modality allows reducing bureaucracy and some risks, also increasing the possibility of better returns.

What are the advantages of investing in real estate?

Besides the new market perspectives mentioned above, monetary applications present more advantages. Check them out below:

Security: real estate is a tangible asset that generates added value over the years. Even in economic crises, the owner will still have possession of the item, with no or little loss, besides being able to negotiate for any value, aiming for profit.

Profitability: The location adds a lot of value to the property, and the better it is located, the greater the owner’s profitability will be, and it may reach surprising levels. In other words, there will always be good returns regardless of the transaction carried out.

Variety: the owner has the freedom to choose what purpose he wants to give to the property, whether renting, selling or exchanging. Usually, the decision is made based on the profile of buyers or tenants, and the region where the property is located (urban centers, beaches, rural areas, etc).

Liquidity: liquidity can also exceed profit expectations, but based on the following factors: local commerce, variety of public transportation, infrastructure, and tourist attractions.

What types of investments are there?

Within a positive economic scenario, many investors seek to invest their money in the real estate sector, either by building or acquiring quotas, always aiming for a more advantageous future return.

There are several types of investments available and it is extremely important to research and understand how each one of them works, so that you can then select the one that best fits your investment plans. Check out some of them:

  • Blueprint properties
  • Used real estate
  • Real estate for rent
  • Financed Real Estate
  • Luxury real estate
  • Real Estate offered by real estate agents

After understanding how to become an investor, what advantages and investment options exist, we will deal with the main financial asset options. Read on to understand in detail:

What are real estate funds?

A real estate fund is when a group of investors pool their resources to be invested together in a certain real estate project. Some examples of investments are: hotels, shopping malls, residential developments, or commercial buildings. The sum of the resources makes up the assets of the “partnership”, which is then divided into shares.

When the operations start to generate gains, they are distributed to the investors, also known as quota holders, in the same proportion as their investments, that is, according to the number of quotas belonging to each one in the real estate fund.

What determines the appreciation or devaluation of the shares is the success of the investment. The fund manager’s decisions regarding what should, can and cannot be done with the development need to agree with the objectives and policies previously defined by the investors.

Different from an owner, the quota holder does not exercise any power over the enterprise, nor does he answer to questions related to it, it is the responsible body or administrator that does this.

Unlike an owner, the quota holder does not exercise any power over the enterprise, nor does he or she answer to questions related to it; it is the agency or administrator responsible for the proper management of the property that does this.

Real estate credit bonds

The real estate credit bonds are fixed income investments acquired in banks, exclusive investment banks, and brokerage houses.

The purchase of the credits works as follows: The investor invests the amounts in a bank, which uses them to finance projects, constructions, or property acquisitions. After a while, interest is generated from operations to be passed on to the investor as income.

Get to know three examples of marketable securities:

LCI (Real Estate Credit Bills): these are securities issued that directly finance companies in the real estate sector.

CRI (Certificate of Real Estate Receivables): These are securitized securities, with the purpose of guaranteeing the payment of loans to companies in the sector, such as real estate developers and real estate companies.

LH (Mortgage Bills): are fixed income securities backed by credits added to the mortgage, which generate gains according to their maturity dates.

Now that you have a better understanding about what is how to enter the real estate investment market, you can access this text and check the real estate market forecasts for 2021, written based on recent research and real estate market experts.

Keep following the VRV Group blog for more information on this subject!