Capital gain - or how we can secretly earn from real estate
Sounds like a stock market term, but capital gains is actually a term that describes the growth of a property's value over time. You know that properties do not have static prices. On the contrary, they are quite dynamic. The main reason is that supply and demand are always involved in pricing, and they are super dynamic. In addition, the value of a property is always related to the characteristics of similar properties, which are in direct competition over time. In other words, the price today and in two years of a property will be different, not because the property has become bigger or smaller, but because at different times in the market different similar properties are sold at different prices.
Over time and at different stages of the market cycle, the value of the property can increase and decrease. The longer you "stay" on a property, the greater the chance that you will make a capital gain. This is based on the fact that in the long run, property prices are always upward. What can you do with this "profit"? There are three directions.
With good capital gains, one likely scenario is to sell the property to cash in on that market increase. This is a good option for investment properties, because if you have to change your home, selling at a high price will almost always mean that you will buy again at a high price. There may be exceptions here if you change neighborhoods and sell in a more expensive neighborhood and buy in a cheaper one. The same goes for property types.
Option two is to mortgage the property. One of the best advantages of capital gains is that you automatically increase your credit adequacy and have access to more credit. This way you can free up funds to reinvest at a higher return than you pay the bank for using the money.
The third option is to simply enjoy the fact that the value of your assets is growing and pay more attention to the things that are important to you.
The author of the text is Georgi Yankov, a specialist with 17 years of experience in real estate transactions. He is a co-founder of Imvestia, a managing partner and manager of the real estate company Primo +. Georgi is the host of the show "The Next Level with Shtelyan and Georgi", which already has over 130 episodes broadcast on most social networks and podcast platforms. The guests in the form are one of the most successful Bulgarians in their fields of activity, and each episode gives great value to all viewers and listeners. Co-founder of Primo + Academy - a leading training organization for traders, brokers, managers and owners of real estate agencies.