Which Investment is Better Buying a property or Invest the money somewhere Else?
I’m thinking about buying a property as an investment. Is it a good choice, or is it better to invest the money?
Real estate investments have both fixed income and variable income characteristics.
First, we need to keep in mind that investment is the application of some type of resource (money or bonds) with the expectation of receiving some future return higher than that applied, even compensating for the loss of use of this resource during the application period (interest or profits). Thus, purchasing a property to obtain future income, either by valuing the property or by receiving rents, is also a way of “applying for the money.”
Once this issue has been overcome, let us differentiate between traditional financial investment and an investment in real estate.
As we said, financial investments can be divided into fixed income or variable income. Fixed-income investments are investments whose yield (interest rate) is determined at the time of purchase of the security, which may be pre-fixed, in which case the yield is determined on the purchase of the security, or post-fixed, in which the yield fluctuates according to a chosen benchmark (example: select). On the other hand, in variable income investments, the yields are unknown or cannot be determined in advance, as they depend on future events, such as economic and economic factors. Typically, investments in variable income seek higher returns due to the higher risk assumed. It is worth remembering that traditional applications can be carried out individually, via the purchase of securities,
With regard to real estate investments, we can say that they have both fixed income and variable income characteristics. The properties, when rented, generate income, which remunerates the investor for the availability of the resource, in this case, the property; in addition, they have a regular payment and can be adjusted annually by an index, similar to fixed-income investments. On the other side, we can defend that there is no predictability about the appreciation or not of the properties, given that their market value fluctuates over time, due to macroeconomic variables such as economic cycle and interest rate and unique variables of the property such as liquidity and obsolescence, making these investments also assume variable income characteristics.
Thus, we directly invest in real estate assets, land, commercial or residential property, or even an industrial warehouse. Such asset can be kept in the investor’s equity (Individual – PF), or the equity of a Legal Entity (PJ) specially constituted for this purpose.
http://tajarat.com.pk/ strives to be Pakistan’s biggest real estate developer ever, guaranteeing the highest international standards, prompt execution, and lifetime customer loyalty. With projects like smart capital city Islamabad
As a general rule, investment via Legal Entity has a tax advantage over investment via Individual. This is because income Tax must tax the income earned from rents at 27.5% in Individuals. In contrast, in Legal Companies, the income is taxed at 14 53%[1]. Thus, substantial savings are the main advantage. However, the investor must also consider, with the help of their lawyers and accountants, the tax and administrative costs for maintaining a company.
If the investor identifies with the real estate market but does not have enough equity available at the time, an alternative to avoid the complexity and high cost of acquiring a property would be to invest in shares of a real estate fund, a financial product in which the investor acquires shares of a condominium that invests in real estate assets. With this product, the investor maintains its exposure to real estate assets. The fund is required to invest in assets linked to the real estate market, for example, commercial properties, industrial warehouses, land, CRI[2], LCI. Thus, the investor can be remunerated both by the income generated by the fund’s assets, as well as by their appreciation, with liquidity similar to fixed or variable income investments,
Remember that good financial planning involves allocating risks according to the investor’s profile (conservative, moderate, aggressive) and the diversification of investments. In keeping with the popular saying, “not all eggs are placed in one single basket.” Thus, investors need to check how much of their assets will be allocated to real estate investments and how much will be allocated to other types of investments to protect themselves from possible market changes. Therefore, using a financial planner is extremely useful to simulate the allocation of assets within a portfolio, always striving for the liquidity of the investments and the client’s financial situation.
- https://tajarat.com.pk/capital-smart-city-islamabad/
-
153-c60c2b17 - on
