18 March, 2023
When we talk about investing today there is a wide variety of options to put your money to work intelligently. Choosing the right investment for your needs and that it meets your expectations will depend on a set of factors that include your taste for the property, economic disposition, correct time and confidence while meeting your needs for recovery of investment capital either in the short, medium or long term appropriate to your conveniences, particular possibilities and interests.
Speaking on the subject of investments, we can highlight among the most popular options in the current market the following:
When we talk about real estate investments we can highlight the essential characteristics of heritage, security and profitability together that at the time of investing the propertiesprovide, reasons why many people choose to invest in a real estate heritage par excellence as the best option.
Throughout history we have witnessed the value that a real estate can accumulate over the years. Apart from the value, there are other characteristics such as: property holding, capital gain, passive income and low risk all this together with the innovative products offered by the real estate market today, make this type of investment one of the best and most recommended options when it comes to investing or diversifying our investment portfolio.
In summary form i.e. real estate can generate continuous passive income and is a good long-terminvestment, as the value tends to increase over time in a positive progressive way resulting in an equity.
Real estate investment is made by purchasing a property, whether it is land, house, apartment, commercial premises or office or a physical building,and can offer several advantages over other types of investments, including potentially higher returns, stability, inflation coverage and diversification.
History shows that the longer you maintain a real estate property, the more money you will make due to the increase in its commercial value,as there will always be a demand for a home or physical space. Sometimes this value can decrease, but investing in a property gives you long-term stability since the market has always shown to recover over the years.
The main factors that cause the appreciation of real estate are:
Population growth: Property value increases in times of increased demand. Population growth increases the demand for residential or commercial properties and this desire translates directly into greater appreciation especially in well-located properties with good connectivity. (Population Growth Icon)
Infrastructure: Social and physical infrastructure is a great growth for the real estate market. Improvements in infrastructure in and around the property that increase the quality of the environment by improving lifestyle add up in value; where factors such as accessibility, feasibility, workspaces, shopping malls, schools, hospitals, tourist attractions, restaurants and entertainment contribute to appreciation. (Infrastructure icon)
Supply and demand: influence market behavior. Homebuyers prefer locations that offer a good quality of life or where there is commercial traffic, where consumers are willing to pay more for a property because they consider living in that location to be desirable or that it is a commercial area with good accessibility. This demand attracts real estate investors, who buy properties to sell later at a profitable rate or keep the property to rent at a good price over time. (Supply and demand icon)
Security: This factor is closely linked to the issue of location, since there are safer areas than others, also the security that the property itself has both outside and inside including cameras, electricity systems, good piping, so that living in the property is synonymous with being in a comfortable and safe way. Factors that undoubtedly influence the value and increase that your real estate investment can generate over time. (security icon)
Tip: As a real estate investor, you must take into account the integral maintenance of your property and perhaps a remodeling investment to be made over the years so that it remains in good condition and avoid being devalued or outdated.
Unlike stocks and, to some extent, bonds, a real estate investment is backed by a high level of stone and cement with long durability, there will always be value in the land and home which is highly considered by financial institutions and this translates into stability and openness to financing options since the property serves as collateral. Other investments may leave you with little or no tangible asset value, such as a stock that can fall to zero or a new car that decreases in value over time. In the case of properties, their value normally increases over time, is long-lasting, even inheritable from generation to generation and is not volatile compared to other goods or types of investment.
A key feature of real estate investments is the significant proportion of the total return generated by the rental income of the property, usually in long-term rentals and in the case of tourist destinations where vacation rentals or short-term rentals through digital platforms can exceed long-term income. This helps reduce volatility, since investments that depend more on income performance tend to be less volatile than those that depend more on the return on the value of capital, thus generating the possibility of a constant, fixed income that even increases with time and demand, thus generating stable income from your investment.
Banking institutions consider real estate as a real asset since it means a tangible investment that has an intrinsic value due to its substance and physical properties so it can serve as collateral to obtain a personal or mortgage loan meaning guarantee and solvency for the lender. Another factor is that in case of obtaining the properties through custom mortgage loans you pay the loans to the bank and incorporate real estate as an asset, you create a good credit history that can free up access to more investment resources and interest rates and preferential loans. For example, some investors use the capital increase in one property to free up funds to invest in another property or project as well as adding and improving the investment portfolio.
In Mexico, the actual interest paid on loans used for the purchase, construction or improvement of property paid annually to the financial institution can be deducted from taxes, as well as property tax, local contributions for improvements, planning or cooperation for public works, maintenance expenses, water consumption, insurance premiums; and if you are running a rental business, salaries, commissions, and staff fees can be considered.
*Restrictions apply, see deductions authorized by the Ministry of Tax Administration (SAT).
For more information:
SAT Tax Administration Service:
Inflation leads to an increase in the prices of land, building materials, labor, legal permits, and other factors that give the owner the opportunity to eliminate the inflationary value invested in a property.
A property’s ability to hedge inflation comes from the positive relationship between growth and demand for real estate; as economies expand, demand for real estate drives higher rents and this, in turn, translates into higher capital values. Therefore, real estate tends to maintain the purchasing power of capital by transmitting part of the inflationary pressure to tenants thus generating peace of mind to the owners of the property since the price for rent can increase according to inflation.
In conclusion, investing in real estate due to the points exposed above has been par excellence one of the best investments in history and continues to be today an excellent investment option preferred by many for its characteristics and value will continue to be an optimal way to invest your money intelligently and safely.
We are a company dedicated to the Sale of Real Estate and we also offer the option to Manage, Promote and Rent. Our real estate inventory and area of operations extends to the Riviera Maya mainly in the cities of Playa del Carmen and Tulum...View More