Betting on investing in real estate has its rewards. Regardless of any type of crisis, there will always be people who marry, divorce or die and properties change hands constantly. Remember, everyone needs a place to live, and it's something that Covid-19 or the economic crisis will not change.
In the context of uncertainty, real estate seems to be the right investment choice. After investing in a business, Mexicans put their money in real estate, according to Piggo, an investment fund Fintech.
There are two ways in which real estate can serve as an investment: acquire a home to live with your family, or, invest in real estate that you can rent –commercial or residential- that will allow you to have monthly cash flow. In the long term, both secure capital gain.
If you are going to buy a house as patrimony
This purchase is part of creating your family heritage, even if it generates an expense in the short term because you are going to pay a monthly mortgage, at the end of the terms you will have your own house and you have used the credit as a supplement of investment. You are going to enjoy this property - which also implies a dividend - and, in the future, you could sell it and obtain another gain -added value-.
Also remember that since 2019 banks have lowered mortgage interest rates, so today more than ever you could take out a loan with a very attractive rate.
Buying a house in times of uncertainty is a way to save, because the monthly mortgage payment is equivalent to a monthly investment that you know you are not going to spend, and perhaps if you didn’t have this commitment, you would not save that money.
So, instead of paying rent, you are going to make a monthly payment and you will acquire a property that over time will earn capital gain, will be worth more, and this consequently increases your wealth.
If you are an investor
A house, an apartment or a land are a good investment, like all instruments, when it is part of a diversified portfolio.
According to Regina Reyes-Heroles, a personal finance specialist, the differences between investing in real estate, fixed income (government debt) or variable income (stock market shares), are in the investment terms (medium or long term), the risk, cash availability and performance.
Investing in fixed terms, allows you to have almost immediate liquidity, have a low risk and an established performance, that is, you will always know how much you are going to earn from your investment. This type of investment does not have high returns compared to variable income or even real estate.
For her part, adds the expert, investing in the stock market (variable income) implies a little more risk, since its value depends on the economic situation of the company in which you invest and the world economic situation. Which during this crisis does not seem very attractive.
Finally, real estate investment is always long-term, as a property does not revalue overnight, the risk is very low, as it is rare for a property to lose its value, and it's only disadvantage is liquidity availability.
Real estate has proven to be a safe investment in Mexico for many years. Historically, a certain capital gain has been maintained in real estate and, in addition, mortgage loans with fixed rates, pre-established payments and the possibility of deducting real interest in Income Tax (ISR) not only give certainty, but also make credit attractive as a complement to saving wealth.