It just so happens that most Russians consider real estate to be the most reliable way to increase their savings. Unlike complex maneuvers on the stock and financial markets, this is an investment that everyone can understand. You can touch it. And even if you don’t manage to make much money, it will still be useful: you can live there.
However, the outlook for the future of the real estate market is not the best now. Mortgage rates have risen to a prohibitive 18-20 percent annually, and preferential mortgage programs are being cut. According to all indicators, there are no signs of an increase in demand for apartments in the near future. This means that you cannot count on skyrocketing prices. Is it worth investing in housing in such a situation?
INVESTMENTS FOR THE PATIENT
As experts warn, it is better not to count on quick super-profits from real estate investments today. Even if you rent out the purchased house, the profit will most likely be 4-5% per year (i.e. in a year you will “recover” at most one-twentieth of its cost). And by putting money in the bank, you can now get 16-18% per year without any special effort and risks.
“Even the once popular profit-making scheme ‘buy at a pit – sell at a finished house’ is now failing,” warns Vladislav Begunov, head of marketing communications at Norvik Bank. – Firstly, you still need to be able to sell in principle now. And secondly, it is not a fact that you will be able to do so at a price that will bring you the planned profit.
But if we look not one and a half to two years ahead, but rather at the long term (at least five to ten years), then the real estate sector has virtually no competitors.
– In some difficult times, the price may fall, but then it falls back. And in the long term, throughout the entire modern Russian period, the price of liquid housing has only increased, and ahead of inflation, says Alexander Chernokulsky, general director of Zhilfond. – People will always need a roof over their heads. And this, despite all temporary shocks, is the main advantage of the real estate sector compared to some conditional shares of technology companies or a specific currency.
HOW NOT TO GET LOST
In all the stories about the benefits and reliability of real estate investments, experts use the misleading word “liquid”. What are we talking about?
Liquid is a property that can always be sold quickly, without a discount. And if we talk about long-term investments, then it is necessary to buy real estate that will definitely be in demand in the next decade.
According to experts, these are modern houses built in recent years with a good location, convenient access roads and developed infrastructure.
Liquid housing is modern, built in recent years, housing with a good location, convenient access roads and developed infrastructure.
Photo: Yulia PYKHALOVA. Go to Photobank KP
– People now appreciate the “15-minute availability effect” – when all the necessary social and commercial facilities are within walking distance of the apartments. Such homes are optimal for both resale and renting, says Svetlana Bardina, head of the residential real estate sales department of the Summa Elements group of companies.
Another important point is that the property should be located in regions where population growth is constant (otherwise, who will need housing there in ten years) and where there is a well-paid job (and without it there is no population influx).
– Krasnodar Territory, Tyumen Region, Moscow and Moscow Region, St. Petersburg and Leningrad Region are showing good dynamics in this regard. People who want to develop themselves are moving to these regions. This means that there will be demand for real estate here, says Alexander Chernokulsky.
Another important point is that properties must be located in regions where population growth is constant.
Photo: Nikolay OBEREMCHENKO. Go to Photobank KP
Experts also consider promising places where there is an influx of state investment.
“These are, for example, resorts where the tourist infrastructure is being actively developed with the participation of the state and a lot of money is being invested in the creation of access roads and infrastructure,” says Tatyana Volkova, a financial consultant and chief expert at the Academy of Tourism. Personal Finance. – These are Adygea, Baikal, Kaliningrad and some territories of the Far East.
The logic is this: as infrastructure develops, new jobs will emerge and tourists will come. And everyone will need housing, including rent.
– It is worth paying attention to those small towns where the development of construction is currently supported at the state level. They are the most attractive for investment in order to sell them, as the prices for apartments there will surely rise, says Vladimir Prokhorov, member of the construction committee of Business Russia, developer and owner of the Udacha group of companies. – And, of course, there is also the market for individual housing construction, which is developing rapidly. Today we already see an increase in prices for land for individual housing construction by 30-40% compared to the previous year.
This is the know-how of the “eternal” series. “Buy land, they don’t produce it anymore,” is a call attributed to Mark Twain.
Of course, there are some details. There is a lot of land in Russia, but not all of it will be profitable. We are talking about vacant lots (without buildings) in places with good infrastructure (or prospects of its being there soon) and permitted individual construction. Apart from resorts, these are mainly suburbs of large cities.
“Land near cities with more than a million inhabitants is increasing in price every year, its value is not decreasing, and the number of vacant lots in circulation is decreasing,” says Tatyana Suvorova, Marketing Director of Cottage and Low-Rise. Construction management of TECHNONICOL.
BY THE WAY
that is turning
You can often hear about this as a way to make money with real estate, which, even under current conditions, can generate up to 40-60% annually.
The goal of investing is to buy a “destroyed” apartment that is being sold at a huge discount, make repairs there and sell it at the normal market value. Alternatively, you can buy an apartment in a new building without finishing it, renovate it and then sell it at a completely different price.
The goal of investing is to buy a “destroyed” apartment that is being sold at a huge discount, make repairs there and sell it at the normal market value.
Photo: Alejandro GLUZ. Go to Photobank KP
“The success of an investor here depends on many factors: his experience, observation, a certain amount of luck, the presence of a good repair team and experienced lawyers who will quickly check whether the property being purchased has any other defects besides being “dead,” warns Maxim Churilov, director of the IDEA Estate real estate agency. – And, of course, this is a strategy only for cities with a population of one million. Making such investments in small towns is extremely risky; it can take a long time to find a potential buyer, and this directly affects the profitability of the project.
MAIN MISTAKES MISTAKES FOR BEGINNERS
1. “Do what others do”
– A typical mistake of novice investors is to follow the majority. That is why we have entire blocks in residential areas where apartments are idle because the owners cannot rent them out or sell them, warns Tatyana Suvorova.
True, at the peak of low mortgage rates and the availability of preferential programs, many rushed to buy apartments in new buildings “on reserve”, hoping to rent them out or resell them at a profit. As a result, as realtors say, in some neighborhoods with recently commissioned residential complexes, rental prices are now below market (despite the fact that rents are rising) – the supply of identical apartments is too large, and the location is not the best.
2. Don’t have a specific goal
“I’ll buy it and think about it later” – this approach, as a rule, does not work. Initially, you need to decide on a strategy: do you want to profitably resell the property or rent it out profitably? Or, in principle, you need it as a “savings book” that you are not going to touch for 5-10 years and, in general, you will live there for now (this is also a strategy, and quite reasonable, too).
– One of the main mistakes is the lack of knowledge of potential customers. People who want to rent an apartment in a new building and those who want to buy it are, as a rule, different audiences with different needs,” explains Dmitry Golev, commercial director of Optima Development. – Selling a studio to a family with a child is as difficult as renting three rubles to a young single specialist.
One of the mistakes newbies make is not having a specific home buying goal.
Photo: Nikolay OBEREMCHENKO. Go to Photobank KP
3. Invest in a mortgage
It is simply dangerous. Even more so if the investor is a “fool”.
“The profit from the investment is not predetermined and the loan must be repaid with 100 percent interest,” recalls Vladislav Begunov.
“This may be somewhat justified in the case of preferential loans and if the apartment is supposed to start being rented out quickly,” says Tatyana Suvorova. – Resale in a few years, taking into account the costs of repaying even a soft loan, will now in most cases not bring income. At best, it will be able to break even.
4. Compare with “how it was”
“A common mistake is to invest now and rely on the income that was available in 2020-2022, when housing prices rose significantly,” warns Maxim Churilov.
Or even cooler: remember the early 2000s, when in some years housing prices nearly doubled per year.
5. Falling for the “marketing” of an Internet guru
“It is a serious mistake to listen to various video gurus who promise to teach you how to earn 40-50% on real estate,” says Vladislav Begunov. – As a rule, at best they want to take money from you for training. And at worst, you can be drawn into some kind of investment project with a very dubious result.
