In Spain there are 965.000 million euros in the hands of the small investor and, according to Pedro Arroyo, general director of icrowdhouse, "each year an additional 66.000 million euros are generated". A good part of these amounts end up going to the residential sector, since housing has traditionally been understood in our country as synonymous with a safe asset.
In this sense, the retail investors They must bear in mind the evolution that this market has undergone, as there are more and more solutions that they can bet on to maximize their savings. Below we analyze what are the real estate products and investment formulas that are more profitable to the individual investor.
Buying, reforming and selling is a formula that can revalue the operation by up to 20%. Acquiring real estate to get it ready is one of the best alternatives for the small investor.
Proper reform of a property can revalue it by up to 20%. This is how Sebastián Molinero, general secretary of Andimac, advances, who adds that in the coming years the home renovation "Will increase the percentage of appreciation", since the Spanish real estate park is increasingly worn out and those properties "are going to enter into negative competition."
Celia Pérez, general director of Propamsa, is of the same opinion, who points out that when carrying out a reform the owner must prioritize "sustainability and improving energy efficiency" of the house, since it is about improvements that "not only have to do with reducing consumption and cutting emissions into the atmosphere", but also with comfort and quality of life at home, "at a time when we spend more time in them than never".
More cautious is Jesús Duque, vice president of Alfa Inmobiliaria, when he recognizes that buying for renovating and selling can be a "very lucrative" business but, nevertheless, it is an operation "not so simple, which carries its risks". Thus, it underlines that for this strategy to be economically beneficial, "It is important to properly assess the cost of the reform, take into account the possible unforeseen events and know the tax costs of buying and selling".
The rental of a home generates an average profitability of 3,7%, although this can reach 7% if it is found with the right property and area. This is a very interesting asset.
According to the latest data from the Bank of Spain, Profitability Average rent in Spain stands at 3,7%. However, according to Jesús Martí, Invermax's Head of Asset Management, this result it can rise up to 7% if a property is identified that allows the future owner to "maximize his investment in the long term". In his opinion, these real estate products are usually "homes that do not exceed 60 square meters and are located in prime areas, with low maintenance costs."
As an example, this expert refers to the peripheral neighborhoods of large cities, "with constant pressure of demand for rent." Similarly, he emphasizes the importance of knowing how to choose the right tenant, because “it is better to have a solvent tenant for many years than to obtain a high rent today and that tomorrow the tenant breaks the contract and the owner must begin the process of leasing from scratch ”.
For his part, Duque insists on the importance of knowing how to choose “well” the type of home in which to invest, since “generally it is the one and two bedroom homes that are going to receive the greatest demand”. This is because the rental market is usually made up of singles or young families "who have not yet taken the step of buying." On the contrary, this expert rejects properties "above or below these dimensions", because for them "the demand is much more residual".
Investing in SOCIMI shares allows you to obtain returns through dividends. They provide added value for retail investors because they do not have to allocate large resources.
The Public Limited Investment Companies in the Real Estate Market (SOCIMI) were created in Spain in 2013 and did so in the image and likeness of the United States Real Estate Investment Trusts (REITs), whose current average profitability is between 4% and 5% %. This possibility, in the opinion of Martí, represents an “added value” for the small investor in our country, since “it is no longer necessary for them to invest 100.000 euros through the direct purchase of a home, but they can allocate much more amounts derecognition of shares of these companies ”.
From Invermax they underline that "there are more and more SOCIMI" in the Spanish market, and that there are several "dedicated entirely to the residential sector". This is due to the particular legislation that governs these organizations, which allows them to have special conditions, from which their shareholders benefit. Among them, its 0% taxation regime for individuals stands out.
Real estate crowdfunding allows the small investor to obtain profitability from small monetary contributions. However, the risk profile needs to be analyzed in detail.
The development of new technologies in the real estate sector has brought with it the emergence of alternative investment formulas, such as residential crowdfunding. This possibility, indicates Arroyo, "allows access to investment to savers who a few years ago had almost impossible access to the sector." Specifically, from icrowdhouse they highlight that until a few years ago, the necessary investment in real estate "was immense and unaffordable for many" but now "With contributions from 500 euros or more they can already have their investment in the generation of assets".
This profitability, he clarifies, is linked "to the risk assumed by each investor", although he assures that this "is in proportion to what is provided". "The interesting thing about this financing formula is that it can be carried out for all types of projects, since a round of financing of 50.000 euros can be opened to reform a house and also open another round of five million to build a residential complex of 100 homes" , concludes Arroyo.