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NEWS - How to choose real estate to invest safely?

How to choose real estate to invest safely?

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Speakers in the “Real Estate: Safe Haven” panel offer suggestions on the type of property that can be invested at the moment and recommend mistakes to avoid in this property truly a “safe haven.”

Discussion session with the participation of Mr. Ngo Quang Phuc – CEO of Phu Dong Group; Mr. Vo Huynh Tuan Kiet – Director of CBRE Vietnam; Mr. Tran Khanh Quang – General Director of Viet An Hoa Real Estate Investment Joint Stock Company with the coordination of Mr. Nguyen Le Hai Dang – Strategy Director of DeMaster Land.

Suggesting a suitable type of investment property at the moment, according to Mr. Vo Huynh Tuan Kiet, the townhouse market in the central area is easier to choose when the price has dropped quite compared to before, and the supply is higher. In addition, land in the suburbs with positive information supporting price increases is also an option.

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Sharing the same opinion, Mr. Ngo Quang Phuc said that the central townhouse could be commercially exploited for business rental or renovated into many rooms for rent, which is very potent. Investors who can afford this type also quickly get income when the market demand is very high.

For investors with little money, from 500 million to 1 billion, choosing the type of real estate to invest in is not easy. Land prices are now much higher. Thus, a mid-range apartment can be an option if using financial leverage but must show the inherent “assets,” which are the ability to borrow through proof of income, the ability to repay…

According to Mr. Phuc, choosing any real estate, whether it’s an apartment or an old house, investors should base it on the profitability of that property. For example, if you buy an apartment for 2 billion VND, the rent must be 10 million VND per month, or if you buy a house for 10 billion VND, you will earn 50 million VND per month. “This is an important foundation for investment, or roughly the cost of income must cover the interest rate on bank loans,” advised Mr. Phuc.

Mr. Tran Khanh Quang suggested from his own experience that he chose to put 60% of his money in the plots of land next to industrial zones, in new projects, and the rest in townhouses near the center. He thinks this is an opportunity for those with the limited financial capacity to buy old apartments “forgotten by the market” for 25-30 million VND/m2 in districts such as Binh Tan, Tan Phu (HCMC).

“At the moment, the price of new apartments is very high, from 50 million VND/m2, because the price for a product has been pushed up. The land price has doubled in the past 12 years, and the construction price increased on average from 8 million VND 4 years ago to 11 million VND/m2 now,” noted Mr. Quang.

Regarding current emerging investment trends such as buying land in suburban areas and provinces or waiting for a second house to increase in price, Mr. Quang recommends “avoiding investment in movement.” With land in the suburbs and regions, it is necessary to carefully study various issues, from development space and infrastructure connection to legal factors, prices, and market sales. Therefore, if you are not a professional, you should not choose this segment.”

Similarly, with the movement of buying a second home, often choosing to relax after owning the first house, then observing the elements of nature, infrastructure, and services must ensure the goal.

The speakers also pointed out many of the mistakes investors are making. Mr. Kiet, for example, a friend of his, boasted that he had bought a plot of land in Bao Loc at a low price of only 15 million/m2 while the price in that area was 2.5 million/m2. I could buy it cheap, but I didn’t understand the market in that area, the location, and the position of the plot of land I purchased.

“The common mistake many investors make, not only in the real estate sector but also in stocks, cryptocurrencies, etc., is investing without understanding, investing in movement,” said Mr. Kiet.

The second most common mistake is that investors often care about their money and forget about cash flow. When investing, people expect to sell quickly, but the product is illiquid while the income cannot guarantee the investment and, as a result, has to be sold to cut losses.

The third is false investment expectations. Mr. Kiet said that there are profitable markets in the medium and long term, but many investors hold the expectation of short-term profit. Therefore, getting caught up in the land fever and consequent “can’t run in time.”

Mr. Quang emphasized that real estate is a great value product, not to buy but to invest. Therefore, it is necessary to consider everything, from projects and products to exploitation efficiency. He cautioned investors “don’t buy orphaned real estate,” which means that the infrastructure cannot be connected but instead must be “lit” properties, which means people must come and live. All to calculate the sales force of the product. “If you can buy it, you have to sell it; you can live it,” he concluded.

Mr. Phuc’s advice to real estate investors is never to forget about legal issues. If you buy a project from a real estate company, you must ask, “Does the project have a construction permit?”. If you purchase land, you have to look at the red book and bring it to the ward or commune to confirm the real estate status and planning. The last step is to do the service with the notary office to check the legality of the land, house, etc.

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