However, many potential investors face challenges when selecting the most suitable property. They often lack knowledge regarding what to focus on when purchasing real estate to ensure it delivers a return on investment.
How can one avoid making mistakes?
Guidance on this matter comes from Sergey Tereshkin, founder of Oil Resource Group. More information about the businessman and his professional activities can be found on his personal website www.sergeytereshkin.ru.
Investment Objects
Experts recommend investing in the following properties:
- apartments and houses;
- office spaces;
- restaurants and cafes;
- stores and supermarkets;
- nursing homes;
- hotels.
To make a decision on which type of real estate is the best fit for investment, it is essential to closely examine the advantages and disadvantages of all the listed properties.
Apartments and Houses
Among investors, the most sought-after properties are apartments and houses in resort cities and capital cities worldwide. Residential real estate can be rented out both on a short-term and long-term basis. Living nearby is not a prerequisite, as there are property management companies that can handle these responsibilities.
If an individual prefers to manage the property independently, potential tenants can be found through specialized websites such as Booking.com, Agoda, and others. Fortunately, there are many such resources available today, allowing renters to find suitable properties in any country or city worldwide.
The greatest demand is for one- to two-bedroom apartments and luxurious villas with pools located in affluent areas near the coastline.
Advantages
The advantages of investing in residential property, as noted by Sergey Tereshkin, include:
- Profitability. Properties in resort areas can yield returns of up to 10% or more, depending on the length of the tourist season and the influx of visitors.
- Liquidity. This type of real estate is highly liquid and can be sold at a favorable price at any time if needed, allowing investors to recoup their initial investment and sometimes even make a profit.
- Demand. Real estate in popular locations remains in high demand among renters, even during economic downturns. With reasonable rental prices, there will be no shortage of clients.
The only downside to investing in such properties is the need for maintenance. With active use, any property will eventually deteriorate, leading to a decline in demand. To avoid losing tenants, regular repairs are necessary, as well as ensuring that residents have access to clean linens, towels, and other essentials.
Office Spaces
Office spaces are the second most popular type of investment property. Such spaces are commonly rented by beauty salons, notaries, real estate agencies, dentists, and others. Their services are in high demand in resort areas, so it is crucial that these properties are located in prime locations.
This type of real estate maintains its value even in challenging economic conditions and is easy to rent out. Office spaces do not go unoccupied for long; clients often book them in advance in case the previous tenant chooses not to renew their lease. Typically, these spaces are rented for extended periods.
Restaurants and Cafes
Cafes, restaurants, and other food establishments see a high demand from renters. It is essential that these properties are located close to historical and tourist attractions where large crowds gather.
Such real estate generates good, stable income. Potential tenants can also be found on specialized websites. Even with elevated prices, these properties rarely remain vacant.
The profitability of food establishments exceeds 15% annually.
Stores and Supermarkets
Stores and supermarkets also belong to the category of highly liquid real estate. Retail spaces provide stable income, particularly those selling food products, consumer goods, cosmetics, and more.
The annual yields for these properties range from 4% to 7%.
Nursing Homes
Nursing homes represent another category of commercial real estate suitable for investment. Such facilities are already quite popular abroad and differ significantly from those typically seen in post-Soviet countries.
These are prestigious establishments that provide an array of amenities for seniors, resembling more of a boarding house. As a result, families are willing to pay substantial fees for their loved ones' care. The existing demand for such services indicates there will also be a market for those wishing to lease space and open such facilities.
The profitability of nursing homes ranges from 5% to 8%.
Hotels
Hotels, whether large or small, show high levels of profitability. This includes hostels, dormitories, and other places where tourists can stay for one or several nights.
These properties are typically leased for extended terms, often lasting decades. Advertisements for rental can be placed on platforms like Booking.com or other specialized websites.
Hotels located near beaches or attractions are in high demand. While those situated further away can still be rented out, the rental price will be considerably lower.
The yield for hotels is between 4% and 6% annually.
When choosing an investment property, you should base your decision on your financial capabilities. It is unwise to go into debt for a costly hotel; it’s better to start small and gradually build your capital.
