Rules to help property not turn into real estate when investing

11/03/2018   Viewed: 718
Real estate is considered a valuable asset, but a wrong decision can turn into a fortune (devaluation and no money).
Having spent 10 years in managerial positions, marketing director, sales instructor for real estate and consumer goods businesses in Ho Chi Minh City, Tran Minh Quang said that many people are spending all their money on housing. Still confuse assets and assets when making investment decisions.

This confusion leads to the efficiency of the investment is not high, even lead to loss, to sell off to cut losses, ie turn a block of real estate assets into the pepper. Mr. Quang shared four simple rules to distinguish and prevent real estate from becoming a commodity and causing financial losses to investors.
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Real estate is a valuable asset but if you make a wrong investment decision you can turn it into a productive asset, causing losses and capital losses. Picture: Vu Le

Rule 1: Real estate spawning is called property
This is a step to clarify the concept of property and consumption. Assets are the result of a return on investment, a value increase, or a specific profit. Dieting is a continuous process of pulling money out of your pocket without producing any money, even losing money, losing money or losing money. The psychology that property is always property is not always right. There are many situations that are investing in an asset, but that is actually the product.

For example, buying a piece of land, waiting for the price of land to increase, selling profit, this is the investment property success. Meanwhile, investing a large block of property is a serviced apartment (equipped with high-end furniture) for rent but the long time guests, months to offset operating losses, Furniture ... is a typical example of the investment rate of capital goods.

Rule 2: Real estate investing by own capital creates more solid assets
This means that the asset or property depends very much on the source of the investment cash flow. Real estate investment by borrowing, the rate of change into higher consumption.

For example, the same real estate, if invested by own capital, also known as equity, reasonable calculation of the duration of the cash flow, when the property is exploited (leased) or sold well , this is a valuable asset.

Meanwhile, real estate investment using loans is too large, but one wants to invest 10 dong, or borrow 9 dong, then to pay back interest, this is unstable investment , tends to turn into pepper as the cost of capital goes to the capital.

Equity formulas are often used in finance and accounting. But in fact, if the debt ratio is too high, the risk of this asset being turned into a large property is likely to lead to a deadly scenario on the asset pile (debt, debt).

Rule 3: Real estate put into operation, high new liquidity is property
This means the real estate is deserted, can not be exploited, easy to buy is difficult to sell ... is the rate of investment.

For example, buying completed apartments for rent to collect monthly cash flows is considered investment property. Meanwhile, buying the whole floor of apartments under construction is intended to resell the difference, but the market liquidity has declined, hugging goods for a long time, this is the type of investment for consumption.

Rule 4: New legal real estate is property
In contrast, disputed legal real estate takes time to be completed or can not be completed in accordance with the law, more than 90% of the ability is the investment of the property (loss, loss of money) .

For example, buying a plot of land with a land use right certificate and a residential land (used to build a house), this is a valuable asset because it can increase over time or be easy to trade in the market. At the same time, we spend some money to buy a plot of land without a certificate, or the whole agricultural land can not be converted to residential use. huge losses.

Quang said that in real estate investment, there are many variables affecting the value of assets (causing the real estate to increase sharply or plunge in a short time). This is a change in the policy of housing, the adjustment of credit policy, the excess supply to affect the demand and of course the lack of changes in the economy.

Therefore, in order to avoid the real estate investment rate from being turned into consumption, real estate market participants must closely follow the development of both the economy and the real estate industry in particular. Adjusting the new flexible business strategy limits the risk.

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