Certainly, it is complicated to invest in property in Barcelona with this scenario. However, we advise doing a flip over investments. House flipping is when a real estate investor buys houses and then sells them for a profit. In order for a house to be considered a flip, it must be bought with the intention of quickly reselling. The time between the purchase and the sale often ranges from a couple of months up to a year. Therefore, buying at a good purchasing price is the key.

“Price is what you pay. Value is what you get.”

For all these reasons, at Investius we are focusing on offering our investors operations at a very good price derived from legal proceedings, inheritances or bankruptcy proceedings with the intention that simply by buying at a good purchasing price, our investor can disinvest in less than 6 months and make a profit. This operation has two advantages: firstly, our money is tied up for less time and we can make a profit sooner and, secondly, if the crisis starts to take off, we will be able to get out more successfully as we do not have the pressure to sell at market value in order to make a profit. The key is, once the asset has been bought, to propose a sale price that is a little lower than the market prices in order to sell quickly, since what we are interested in is buying and selling in a short period of time and making a profit.

Another way of investing that we advise is to buy flats or apartments that need a renovation. Purchasing these kind of assets guarantees a lower acquisition price and by renovating it, we will add value so we we’ll sell it for a good profit. In order to accomplish so, it’s key to control and not exceeding our reno budget and to check out the area’s market price for full renovated flats. 

Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.

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La entrada House Flipping and the art of the purchase price be so attractive that even a mediocre sale gives good results. se publicó primero en Investius.

If we analyse the impact of the COVID19 on the real estate sector, we can see that the offices and commercial premises field, which had a turnover of 1.9 billion euros in the last quarter, has been hit hard, as the crisis we are experiencing is mainly affecting companies and, in particular, the leisure and tourism sector.

As a result, hotels will suffer a drop in demand due to the fear generated by agglomerations and the possible restrictions on mobility between countries that are coming up to prevent outbreaks of COVID19. Likewise, office owners are facing downward rent negotiations in order to be able to withstand the economic impact of the crisis.

Therefore, the industry’s situation does not seem too favourable. However, if we want to invest, the alternatives to real estate investment are practically non-existent. Investment in startups will suffer a significant decline, due to the high risk involved in this type of investment and the economic consequences that companies will have to bear in 2020. The break in the financial markets and the reduction in interest rates will offer investors very low returns.

Although the outlook is not very promising, the investment alternatives to the real estate sector are looking less than attractive. The high volatility of the market and the reduction in interest rates will mean that we can expect insignificant returns.

Thus, from an investment point of view, we believe that the general trend will be to invest in the real estate sector or venture into M&A operations, taking advantage of the financial situation of some companies after the crisis.

Keys to investing during and after COVID19

That is why at Investius we want to give you our keys to continue investing in the real estate sector, despite everything. In this moment of uncertainty, from Investius we bet for:

1. Flipping over investment on the residential sector reports high yields and give us an edge although the market prices fall. Thus, we work to present to our investors speculative transactions that offer around 30% of profitability in order to obtain a net profit, after the fall in prices, of 15% in less than 6 months, approximately.
2. Fleeing, for the time being, from the offices and premises sector. The hardest blow is being dealt by the tertiary sector, i.e. offices, retail, hotels and restaurants. Surely, we could exclude the logistics industry from this fall. It seems to be holding up pretty well to the crisis although part of the distribution business is suffering from the lack of activity in ports and airports
3. The current crisis may prove to be a great investment opportunity for large investors with financial possibilities as this situation will allow them to present much more aggressive offers and obtain real estate at a price well below the market. Turnkey projects for funds that learn to be flexible and optimize fixed costs to prepare for changes in demand and prices will be one of the keys for this type of investor.
4. Tourist rentals. As the tourism sector recovers, if you travel, you would prefer renting an apartment rather than going to a hotel or hostel, because of the fear produced by the COVID19 and in order to reduce possible risks of getting infected, if there is a resurgence.
   

   Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results.

Conclusions

In summary, taking advantage of the market price correction that will occur, diversifying investment through operations of lesser amount and having an eye for detecting the opportunities that will arise due to the crisis, is our recipe for investing in Real Estate during 2020.

It is already known, to rough seas, fishermen’s profit 🎣

www.investius.es | info@investius.es | https://www.linkedin.com/company/investiusbcn/?viewAsMember=true

La entrada Guide to invest in Real Estate during and after COVID19 se publicó primero en Investius.

It is clear, therefore, that having a financial plan that reduces risks, controlling that expenses are not increased and seeing that income is equaled or exceeded as planned, is key to giving confidence and having an orderly growth. This premise is applicable to both consolidated companies and entrepreneurs.

In this way, one of the most common requests from our clients is to obtain bank financing with the best possible conditions.

Before arranging meetings with the various banks, it is necessary to carry out an analysis of the current financial situation of the company and the forecasts for at least five years. By means of a detailed study, we will be able to evaluate what the needs are and how we should present the documentation to the different banking entities.

We have many clients who have a good financial situation, with reasonable forecasts but on the other hand the entities ask for personal guarantees or endorsements. When applying for bank financing, this is one of the big battles.

So, in order to avoid the partners having to personally guarantee or give too many guarantees, it would be interesting to think a little ‘out of the box’.

Banks, in general, understand that betting on a startup is risky and long term. However, sometimes we can give up some concessions in exchange for the financing on the conditions we want.

We have to assume that the client bank relationship is based on trust. On the other hand, any one of them always wants to get business from you.

Thus, for example, if our company is an e-commerce company, changing the virtual POS provider and implementing that of the bank to which we apply for the credit makes the operation more attractive for the latter. Another concession that is interesting in this sense, is to commit the employees of the startup or the company to open an account in that entity. These measures are welcome as they bring extra business to the bank and generate confidence.

In this line, another point to consider when presenting the documentation is to clearly structure what the funds will be spent on by establishing a concrete business plan for the activity for which we need the investment. By way of example, if we need cash flow to make the international jump to another country, we should provide, in addition to the documentation relating to the business and its financial status in general, a specific business plan that concisely explains how this international jump will be made, in which countries, with what timing, what objectives are set and what actions are taken, among other issues. This information, plus the metrics and future financial forecasts, will give the bank a clearer picture of the financial operation.

If we are willing to put ourselves in the bank’s shoes and think about what we can offer that will be convincing and generate confidence in the institution, we will have a better chance of being granted the credit we want without personal guarantees or with minimal guarantees, since, after all, the banking business is based on creating mutual trust.

To sum up, in order to obtain financing we need to be able to generate trust and bring business to the bank, specifying the reason for the credit and the future financial forecasts.

www.investius.es | info@investius.es | https://www.linkedin.com/company/investiusbcn/?viewAsMember=true

La entrada Do you know how to get bank financing for your company or startup? se publicó primero en Investius.