2023-08-08 22:12:37
Whether you have a property or are in the process of buying a home, regardless of the purpose you have for it, it is important that you know the basic points that will allow you to evaluate how your investment is going or, how your investment will be projected in economic matters.
For that, through the webinar ‘Investment in real estate for beginners’, La Haus recognized 3 real estate terms that will help you to know it.
Cash flow
It is not important if your purchase is intended for rent or sale. This term refers to the amount of money coming in and out of a real estate asset or real estate investment during a given period of time. It is calculated by subtracting the expenses (taxes, maintenance and/or mortgage), from the income generated by the property, either by sale or rent. When this cash flow is positive it indicates that the investment is generating profits, while a negative one is equivalent to losses. It always requires good financial planning. Write down on a calendar how much goes in and how much comes out of the box. This will visually give you an overview of how that flow is going, since you must seek a positive balance. Probably when you start there will be a negative balance, it is normal for the initial expenses, but remember to go towards that balance.
valuation
It is the increase in the commercial and cadastral value of a property over time. The valuation may be due to several factors: market demand, property improvements, area development, changes in the economy, construction of public works, to name a few. We must not lose sight of the fact that the valuation of a property It is related to the increase in the cadastral value, as well as its commercial value.
Each refers to the following:
cadastral value. It is the opinion issued by the cadastre of the municipality or the federal entity to determine the cost of a property. Those in charge of calculating it are the associations of appraisers and public notaries certified by the Federal Mortgage Society (SHF).
commercial value. From an appraisal, the price of the property in the real estate market can be determined. Among the factors that are considered are the characteristics of the property, the location, the national economy or the years of construction.
“The best thing to do is to start with something small to familiarize yourself with the concepts, it is about having patience to understand all the mechanisms and over time you acquire knowledge and greater confidence. When you venture into real estate investment, you generate value every day, every month, every year; that is, your capacity increases, the leverage quota increases, the income you receive and allows you to grow and invest more and more”, mentioned Rodrigo Sánchez-Ríos, co-founder of the company.
Cost effectiveness
It is to know if it is a safe operation, with this indicator the utility of a real estate investment is evaluated. You can measure gross profitability and net profitabilityhere the proptech shares the formulas:
Gross profit. The expected gross income of the property is multiplied by 100, the result is divided by the total value of the property. For example, an apartment with a value of 3 million pesos, which will rent for 15 thousand pesos, would be calculated as follows :
15,000 (monthly income) x 12 (months) = 180,0000 (Annual gross income)
180,000 x 100 = 18,000,000
18,000,000 / 3,000,000 = 6% (gross profit)
net profitability It refers to the real gains from the investment, so additional expenses such as payment for services or maintenance have to be deducted. Following the previous example:
180,000 (gross annual income) – 30,000 (additional expenses) = 150,000
150,000 x 100 = 15,000,000
15,000,000 / 3,000,000 = 5% (net return)
If you master these terms, you will have a solid foundation to enter the world of real estate investing. In addition, it is a way to evaluate and manage your investments more effectively. It is also important to delve into other related aspects, such as market analysis, risk management, and legal and financial knowledge.
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