1. Rent out an apartment
The method is simple, but it is important to act within the law. The first step is a contract. For both long term and daily rentals need to conclude written contract with the employer. This is to protect finances and property in case the tenant damages the furniture or starts releasing the apartment without your knowledge. Without a contract, it will be difficult to argue and seek compensation. Another way to secure yourself financially – take new tenants have a deposit and specify in the contract in which cases the amount will not be returned to the tenant.
The second important point is taxes for renting an apartment. Individuals pay 13%, IP simplified – 6%. If this is not done, there is a risk of fine — from 20 to 40% of the unpaid tax amount. It does not release the debt itself.
Rent out a real and fully paid apartment, and housing purchased with a mortgage. But we must take into account the demand in the real estate market and rates from banks. Let’s say if the cost of rent drops by 4%, and the mortgage eats another 3% per year from the yield, you can be in the red. This is especially true now, as real estate prices and mortgage rates have skyrocketed in the spring.
2. Organize sublease of rented accommodation
The area you rented can be retake to another person. In this case, you will not have to buy an apartment, but it is important to obtain the consent of the owner and fix it in the primary lease agreement.
There are two ways to earn money here:
- Rent out part of the premises. Let’s say you rent a two-room apartment and put one more person in a spare room.
- Rent out the rented space during absence. Find a temporary tenant for housing for a vacation or business trip.
In addition, the cost of a sublease can be increased due to the absence of obligations. The primary tenant is still responsible to the owner for the condition of the property and timely payment, and the subtenant does not need to worry about this.
For security, it is also important to conclude an agreement similar to that which is drawn up when renting out housing. The only new condition is that the validity period of this document cannot exceed the terms of the primary one.
3. Invest in commercial real estate
It is not necessary to spend tens or hundreds of millions, or maybe even billions of rubles to open a shopping mall or turn an apartment on the ground floor into a shop or cafe. You can invest in commercial real estate with a relatively small amount on hand through mutual funds (UIFs). They collect funds from investors and invest them, and in exchange, fund participants receive a share – a security confirming ownership. Mutual funds can deal with different assets – stocks, bonds, business and, in fact, commercial real estate.
Depending on the liquidity of the asset, that is, the ability to quickly sell it, mutual funds are open, interval, exchange and closed. Real estate funds are usually just closed ones: it is quite easy to buy shares at any time in banking applications, but to repay them after closing (the deadlines are indicated immediately). It will be possible to exit the fund earlier than the planned date only by reselling the share to another person.
Yield here provides a change in the value of the share: it grows along with the price of real estate and fees from tenants. The frequency of payments depends on the strategy of the closed-end mutual fund:
- If the fund invests in commercial real estate under construction, it will be possible to make a profit only after its commissioning. Until the share is sold, no money will be credited to the account.
- If the fund buys ready-made properties, shareholders receive interim rental income every quarter. There is no need to wait for the redemption of the share in order to receive income. Contracts with tenants are concluded for a long period (from 5 to 15 years), which ensures the stability of payments.
In any case, after the fund closes, the property is sold and the money is distributed among investors. The amount of the initial deposit increases due to the profit from the increase in prices for objects.
There are risks in this way of making money. For example, early exit of tenants or a decrease in the market value of real estate can affect profitability. In order for the share to be stable, you need to carefully study the mutual fund before buying: check its history, reviews, see which clients it works with.
It is easy to invest in real estate through closed mutual investment funds with Modern Real Estate Funds Management Company, which has been operating on the Russian market since 1996. MC now manages five closed-end funds that buy and lease warehouses, shopping malls, offices and other expensive and lucrative premises.
The cost of the minimum contribution is 100,000 rubles. It is cheaper than a full-fledged purchase of commercial real estate, moreover, it is less energy-intensive: the choice of premises, communication with tenants, documentation – all this is taken over by the management company. The owner of the share at this time simply receives income. The term of investment in closed mutual funds is from 5 to 10 years. The rights of unit holders are also guaranteed by a special depository: it keeps records of the rights to units in many funds and management companies at once.
Before buying real estate, Modern Real Estate Funds Management Company conducts an assessment of investment risks and five types of audits, including technical and legal, and selects only high-quality properties. In addition, the company evaluates the attractiveness of real estate for anchor tenants, that is, large companies and federal networks, such as marketplaces. The risks that they want to break a long-term contract and leave the site are less than that of a small and only developing business.
Become an investor
4. Resell the “killed” apartment
There are enough apartments on the secondary real estate market with poor repairs, emergency communications or legal violations. Due to problems, their cost is usually low – even if the location is good and the footage is impressive. You can make money on such real estate if you eliminate all the shortcomings and put up for sale at a market price.
In this case, you need to assess in advance your capabilities and the degree of problematicness of the apartment. To bring it into an attractive appearance, you will have to spend energy, invest in finishing materials, plumbing services, hire a lawyer and put documents in order. In addition, you need to act quickly after the purchase: there is a risk that during the repair and resolution of other issues, the market value of housing will fall and erase all potential benefits.
5. Buy an apartment in a house under construction
At the construction stage, housing costs less, and when the apartment is ready, you can resell it for more and win on the difference in price. In this case, a share agreement is concluded – acquired property rights, not the apartment itself. To avoid problems with the developer, you need to make sure in advance that the text of the document indicates the terms of commissioning, the terms for handing over the keys and the conditions for compensation. With the latter, it will be easier to resolve issues if the final living space turns out to be different from that stated in the contract in terms of footage or other conditions.
In addition, before buying, it is important to carefully consider the history and reputation of the developer – otherwise there is a risk of running into a long-term construction or just getting an unsuccessful apartment. To do this, you need to study the documents on the developer’s website, break through it in the Unified Information System for Housing Construction and the filing cabinet of arbitration cases, and also read customer reviews.
6. Invest in mortgage-backed securities (MBS)
Mortgage-backed securities – bonds, produced banks. The scheme of work is as follows: the client of the bank takes money from him to buy real estate, and the bank issues securities for the same amount and sends them to the exchange, where they are bought by investors. The bank in this case wins by compensating the funds spent on issuing a loan, and the investor receives a guaranteed income: the profit is fixed and drips once a quarter or six months from the interest that the lender pays to the bank.
The main disadvantage of this method is long-term: you can withdraw the deposit only after the mortgage is paid in full, and this is usually decades. In addition, there is a risk that the borrower will not be able to pay the mortgage at all. But the amount of the deposit can be any: it is real to buy the ICB for 1,000 rubles. And they are sold on exchanges – you don’t need to go anywhere and interact with third parties to buy.
7. Buy developer bonds
Developers cannot now use the funds of equity holders to build new houses – the money is in escrow accounts. And they need funding, so they release bonds: investors buy them, that is, they give funds for the implementation of projects, and the developer then returns the money, but with interest.
Yield here is high – 10-15%, but there are many risks. For example, if the demand for housing in new buildings decreases, the sales figures of companies will fall – there will be no money to pay interest.
Acquisition of shares in a closed-end mutual fund is a reliable way to make money on real estate. There are few risks here, because the profit is formed not from one, but from two sources – the cost of rent and changes in the market price. Income is distributed among shareholders once a quarter. The strategy of the Closed-end Mutual Investment Fund of Management Company “Modern Real Estate Funds” involves the purchase of only built and already leased objects, so investors begin to receive profit from the share immediately. And their potential profitability is not lower than VOD – about 15% per annum.
You can become an investor in commercial real estate on the website and in the office of Modern Real Estate Funds Management Company. Employees will help you choose the right fund, draw up documents and make a deposit.