Real estate prices in Belgium have consistently risen over the years. The price increase in 2020 was 5.7%. It therefore seems wise to invest your savings in real estate instead of leaving your money idle in a savings account. But when is such an investment interesting, when should you start investing and what is the best option for you? These are questions everyone asks themselves, but to which there are no instant answers. We gladly help you on your way with Matthias Elewaut, Sales Director of ION.
When it comes to investing, age plays a very limited role. Whether you are in your early twenties or late fifties, it is your capital that determines whether an investment is a smart move. After all, people in their twenties who purchase a home are already making their first investment. They often opt for a new-build, and rightly so, since a sustainable, durable and ready-made home does not entail any unexpected costs and is of the highest quality. In addition, it is now possible to purchase a new-build home at 6% VAT instead of 21% VAT, provided that the project meets certain conditions.
The temporary VAT reduction is not the only favourable factor; taking out a loan is also very attractive at this moment. As interest rates are historically low, investors with limited financial means are able to secure a loan. The leverage effect is of particular interest to this type of investors: the less they invest their own funds in real estate and the more they borrow, the greater the return. By limiting the amount of money you contribute personally, you keep sufficient funds for investment in other projects, which will in turn produce returns as well. This way, you create a leverage effect, a very clever and efficient investment method.
Residential rental market
We often see people over 40 opting for investment of their savings in student rooms, which their own children can use. Once their children have completed their studies, they can rent out the rooms as an additional source of income or sell them and cash in on the value that has increased over the years. A second home on the coast or at another holiday destination also continues to be a popular investment. As you can use it yourself as well as rent it out, it creates a win-win situation.
However, the residential rental market currently offers the best return on investment. The demand for high-quality rental flats is constantly growing. This trend is especially visible in larger cities. The main advantage we offer at ION is that we always carry out housing developments at interesting locations. As we have noticed that there is still room for improvement in terms of high-quality affordable rental homes, we have recently created the ION Residential Platform to invest in this type of real estate.
Would you like to enjoy the benefits of an investment while being free of the concerns? In that case, a rental guarantee project may be ideal for you. From day one, you can be sure of a return on your investment, even if the tenants do not pay on time or if your property is not rented out for a few months. In this context, it is important that you always work together with a good, reliable partner, for instance a social lettings agency. So first thoroughly look into the matter and look for quality in this respect too!
Investing in real estate certainly is a smart move, provided you have sufficient funds. We will discuss this topic extensively in our next Real Estape podcast which will be released at the end of June. Stay tuned!