THE MOST IMPORTANT FACTORS THAT DEFINE EQUITY IN REAL ESTATE
It is common to hear that investing in real estate is an excellent idea because over time their “capital gain” increases, an opinion that in the vast majority of cases is true, because despite the high price you pay for a property, its value will increase. over time, regardless of the ups and downs of the economy.
What exactly do we mean when we talk about “capital gain” in real estate?
Real estate equity refers to the increase in the value of a real estate property over time, as a result of external factors such as market demand, location, development of the area, accessibility and urban services, among others. others.
It’s an important factor for investors and homeowners to consider, as they can use equity to determine if a property is a good long-term investment.
In general, the equity in real estate depends on a combination of factors that can affect its value and attractiveness in the real estate market, some of which are beyond the control of the owner, while others may be influenced by their management of the property. .
Among the most important factors that define goodwill we can include:
The location: Properties in more developed, accessible and well-serviced urban areas tend to have a higher capital gain than those located in less developed areas.
The quality of the construction: It is important to make sure that the property is well built and that the materials, finishes, electrical, hydraulic and sanitary installations are of quality.
The state of the market: Real estate is a highly dynamic market and economic and political conditions can affect the equity in real estate. For example, in a booming real estate market, property prices can rise significantly, increasing your equity.
The development of the area: The capital gain will improve if the area in which the property is located is experiencing significant development, such as the construction of shopping centers, parks, communication routes or new infrastructure, as well as access to higher quality services .
The condition of the property: The age and condition of the property can affect its equity. A property in good condition and well cared for usually has a higher capital gain than a property that requires repairs. The size and design can also influence its added value, since its dimensions and functionality will be more attractive to potential buyers.
Interest rates: If interest rates are low, there may be more buyers interested in purchasing a property, which will increase demand and generate equity. Conversely, if interest rates are high, there may be fewer interested buyers, creating a loss.
If you are already an owner, there are several ways in which you can influence to increase the capital gain of your property:
- Make improvements and renovations that make it more attractive to potential buyers. For example, you can update the kitchen and bathroom, renew windows and doors, switch to a sustainable energy system, paint, and fix any maintenance issues.
- Keep the property in good condition. Carry out regular maintenance, both inside and outside the property and make sure that all areas are in good condition.
- If your property is in a neighborhood where demand is high, you may want to consider adding amenities like a pool or sundeck to increase its appeal.
- Make an extension if you have enough space on your property; You could add more rooms, expand the kitchen or create a rest or recreation area.
- Stay informed about real estate market conditions in your area and the prices of properties for sale. This will allow you to adjust the price of your property accordingly and maximize its capital gain.
Now, if you are in the process of buying real estate, it is also of great importance that you analyze its current capital gain and its growth potential; For this, you can be guided by the factors that we mentioned previously, that is to say: the location, the market demand, the urban development, the quality of the construction and additionally, the history of the property, since this will tell us if it has faced structural problems or accidents that compromise its value in the future.
It is worth remembering that when we are going to make an investment it is highly recommended to do an exhaustive investigation so as not to compromise our assets.