Investing in real estate really comes down to numbers, and it’s not just price that matters.

• How much are the condo fees?
• How much are the taxes?
• What kind of maintenance should you expect?
• What type of rental can you expect?

An experienced investment broker will be able to steer you toward the profitable ones and encourage you to steer clear of the ones that look great but don’t give the best returns.

BUYING A PROPERTY WITH RENTAL INCOME

There is a reason many people invest in real estate: land is a finite resource and therefore its value will increase over time . How quickly those increases occur and in what areas are some of the variables, but overall, land is a solid investment.

It is undeniably convenient that, by putting a roof over your head, you can at the same time be foreseeing your future. However, it is also true that there will always be people looking to rent, and becoming the person they rent to can be a great way to generate some income for yourself and pay off the mortgages you use to purchase a property.

Are investment properties worth it?

I chose the numbers to use in this analysis at random. I’m not trying to say that a rental property will result in a 6% long-term return. If we increase condo fees, property tax or miscellaneous costs, or decrease rent, let alone increase the mortgage rate, all of those changes would make the numbers worse. The point is that even if a rental property has a loss, that doesn’t make it a bad investment.

Your performance is not based solely on your cash flow. It is based on your initial investment, your net worth increased each year, and your cash flow.

Availability of Professional Help

Whether you are an international investor or a resident, there are good property management companies ready to guide you through the rental property buying process. This ranges from investment consulting and determining your investment needs for appropriate recommendations to offering in-depth knowledge about financing your purchase by obtaining a mortgage, as well as legal, insurance, accounting and tax advice on buying and renting a property.

Also, if you don’t have time to do the daily commitments of a landlord in relation to your property, such as finding tenants, collecting rent, maintenance, etc., a property management company can relieve you of these tasks while ensuring your ROI is on track for the long term at a nominal fee.

Financial situation

Of course, you don’t want to have financial problems with the decision you decide to make. Many investors will need an investment property loan from a financial institution.

If possible, a larger down payment might be a good idea, but if it causes cash flow problems, you may want to reconsider. There are also other financial matters to consider, such as maintenance costs, property taxes, and how much rental income you can expect.

Maintenance costs and property taxes

There are also other financial matters to consider, such as maintenance costs, property taxes, and how much you can expect to make in rental income.

Speaking of taxes, it’s important to note that capital gains tax can vary from country to country and it’s crucial to understand it before making any investment decisions.

For instance, in Portugal, the capital gains tax is currently 28%. Understanding the tax laws of the country you are investing in can make a big difference in your investment’s profitability. Therefore, it’s important to seek out the help of professionals like one of our clients we have cooperated with, (see this article) whom are Portugal realtors and can provide guidance on the capital gains tax laws of Portugal and help you make informed investment decisions.