Buying income buildings: how to do it? here are the tricks of the investors revealed

Buying buildings and making them income seems to be the fashion of the moment.

In fact, more and more investors are looking for entire buildings to buy.

But why do they do it?

For some it may seem like a crazy expense, but in reality it represents a highly profitable real estate operation, as long as some basic rules are reflected, which we have tried to summarize below.

Here are the 3 tricks to buy and make a building income.

Buying well: as is often said, the real deal in real estate is not done by those who sell well, but those who buy well. And in this period, after all, buying well is also quite "easy". The buildings, in fact, are usually bought at auctions where the average prices are below half the market value, or by private individuals who, not being “experts” in the management of an important structure, risk being suffocated by the high management costs.

Use of money: the investor never buys entirely with his own money, indeed often he does not use his own money at all to buy, but at most to "guarantee" the loan. Banks or more modern forms of financing such as crowdfunding are inclined to lend money for real estate transactions, which in addition to being more guaranteed than other markets, such as the stock market, give the opportunity to place guarantees directly on the property.

Another advantage is the cost of money. Today the interests are very low and affect for a negligible amount compared to the operation itself.

Income from the property: since these are properties consisting of several real estate solutions, some of these may be residential, others commercial. Also in this case, the real estate developer often tends to sell a part of the property to partially or completely return the investment made, while rents the remaining properties which become a real income.

If, on the other hand, the property needs renovation, the strategy is to renovate one part at a time, usually 10/15% of the total, so that the remaining part remains in income.

But what is the average rent?

It is difficult to give a certain and precise answer. What we can say is that on the purchase and resale operation the margin is about 30%.

On income transactions, the variables to be calculated are many more, but we can say that if the transaction is good and the investor is particularly good, the average income can be about 20/25% per year if not more.

That is, in 5 years the investor, in addition to having returned the entire investment using third party money, is in possession of a property that he will continue to produce constantly until he decides to sell it.