Real Estate Investments

Real Estate Investments – A Guide to Maximizing Your Investment Returns

The concept of a “good real estate investment” may vary from person to person, but the fundamental goal remains the same: to increase your net worth, whether it’s a personal residence or a rental property. The return on investment depends on the capital you invest and the risk you take. A successful investment is one that increases your net worth compared to other investment options with similar risk profiles.

What Determines a Successful Investment?

When you invest in real estate, whether it’s a rental property or a personal residence, your property’s net worth should increase more than it would have if you had invested in another investment option. The capital you invest includes all the money spent on purchasing the property, including all expenses, not just the property value.

Investments in Income-Generating Properties

When investing in income-generating properties, such as rental apartments or commercial spaces, cash flows and property value changes play a crucial role. For example, if the net rental income (after deducting all expenses) is €250 per month and you have invested €50,000, then your annual return is 6%. If the property’s value increases by 1% or 2%, the total return can reach 8%-10%. This long-term increase makes the investment particularly profitable, especially when comparing the results with other investment options.

Investments for Personal Use

Buying property for personal use is also a form of investment. The question here is whether this purchase will improve your overall wealth. The return is calculated based on the cost of the property and the potential rent you would avoid paying. If you do not intend to keep the property for at least five years, the investment may prove negative, as the costs of purchase, maintenance, and potential selling may outweigh any appreciation in the property’s value.

Holding Time and Long-Term Returns

The longer you hold onto the property, the greater your chances of achieving a positive return on your investment. Long-term ownership reduces the risk from market fluctuations and increases the likelihood of appreciation in your property’s value, helping you build wealth over time.

Maryland P.S. is committed to guiding you through every step of the investment process. From finding the right property and upgrading it to managing your income, our team is here to ensure you achieve the best possible return on your investment.