How to Profit from Real Estate Investment

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Year after year real estate has proven to be a consistent way to generate large amounts of money. It doesn’t matter how many times the market has fallen and picked up over the past century, it’s still an industry with massive credibility.
Even with the proven facts above, there are many who hesitate to jump into this venture. But why? The reason is simple. Some people feel like they might not be able to raise the money to invest, while others may be afraid of trying and failing. As in chess, you must plan a strategy and think several steps ahead to overcome whatever may come your way if something were to go wrong.
How does one plan a successful strategy? With knowledge, trust in your instincts, and a good team around you. How will you profit from real estate investment? Understand EXACTLY how things work. Real Estate explained in a simple way can be reduced to: Positive cash flow, which means that your income must exceed your outgoing expenses.
Related: Tips When Purchasing your First Investment Property

Low Cost Properties

Sometimes you can find hidden gems in the market if you know where and when to look. Two examples are foreclosed properties which can provide a buyer instant equity in the property or a quick sale which happen when the property hasn’t been foreclosed yet and the bank allows the owner to sell for less than the mortgage owed.
Generally, both of these options offer a great opportunity to find a good price and on a great property. Although the downside is that sometimes you are required to pay cash upfront for it, if you want it as time is limited on these types of sales.

Selling Higher

If you have enough money to invest in home improvements do so. Investigate your competition (other properties for sale around the area) and evaluate how you can add unique value to your property and make it stand out from the rest.
Many investors stage properties to attract buyers that are willing to pay over market value. This is part of the charm of real estate, sometimes you can simply beat the market.
Related: How to Maintain and Increase the Value of your Property Over Time


The majority of real estate investors are purchasing properties to rent out to people that are unable or not willing to purchase a property of their own.

• Commercial Rentals: Commercial properties can be quite attractive to investors as well as they normally require a minimum of a multiyear lease as opposed to residential leases that start from 6 months and up.

• Vacation Rentals: Vacation rentals or short-term rentals tend to offer a higher ROI (return on investment) as the property is being rented out nightly, or weekly, at a higher rate than what would be charged on a long term lease. The drawback however on short term rentals is a substation amount of wear and tear with people coming in and out as well as non-guaranteed rental income. Vacation rentals can be seasonal so during the low season make sure you have funds set aside to cover expenses on the property should the property not be rented enough.


Tax Benefits

What is the difference between a business owner that makes $100,000 and a Real Estate Investor that makes $100,000 in that same year? Who do you think will get to keep more from that money?
Depending on the laws of the country you have purchased your property, the taxes you will pay from real estate income will be lower than the amount of taxes that business owner will have to pay the government for being self-employed.
During the month of September 2017, important changes occurred to Panama´s property tax reform. According to the MEF, Ministry of Economy and Finances, the ones who presented the reform in the first place, this bill represents “the most important tax reduction” in the past 40 years.
Related: Discover the NEW Property Tax Reduction Reform in Panama

Property Value Appreciation

Even though the market goes up and down and there could be recession, in the long run your property should gain equity through property value appreciation and paying down any financing debt using the rental income.
The key to success as in any business is continuously educating yourself and surrounding yourself with the right people that can assist you in making the best decision possible.
You can also download our latest guide Top Mistakes to Avoid when Investing in Real State in Panama to succeed on your real estate endeavours.
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