Discover investment opportunities and risks in the real estate market in 2023


With the Selic (basic interest rate of the economy) at 13.75%, investments in fixed income become more attractive. However, the opposite effect can occur in the real estate market.

“With the increase in inflation, the property becomes more expensive, the installment becomes more expensive, and we have financing that is linked to inflation”, says Léo Rosenbaum, managing partner of Rosenbaum Advogados.

“Banks that used to charge a financing rate of around 7% now charge around 10%, and this has greatly increased the cost of the property.”

In addition, other aspects of the current economic situation make it difficult to access credit. “Banks are more selective given the moment of default, the fiscal risk and the political instability not only in Brazil, but in the world”, says financial planner Luciano Wajchenberg.

On the other hand, those who already own properties are not always able to pass on higher interest rates to the tenant.

“There is a limited ability to pay, so not necessarily the high interest rate causes you to be able to increase the rent. Leaving the money invested in the bank will give a very good return”, says Wajchenberg.

Such profitability is complemented by the greater liquidity of fixed income investments, which can be an attractive factor in the midst of economic uncertainty. “Although real estate is rock-solid security, once you have the money in your account, you can redeem it at any time,” says Rosenbaum.

Auctions can be opportunities to buy below market value

Timing is important at this point. Wajchenberg advises buying from landlords who urgently need cash or taking advantage of opportunities at auctions, with advice from professionals in the field.

However, such alternatives may not be suitable for those who are in a hurry for profitability: “The operations are complex and require a prior and careful legal analysis.”

The assistance of specialist lawyers is also recommended by Ricardo Humberto Rocha, professor of finance at Insper. He claims that the legal risks of auctions are greater than other types of investment.

“There are several cases in which the person pays relatively cheaply, but then more individuals appear claiming to be owners. The debtor can also file a lawsuit to annul the auction, or else there is a need to file a lawsuit because the debtor does not want to leave the property”, says Rock.

The professor points out that there are certain property profiles that tend to perform well when rented. “The great opportunity for people who have up to BRL 500,000 or BRL 1 million and want to generate rental income is to buy properties with one to two bedrooms, always in the transport hub, where there are preferential subway or bus lines arriving quickly. “

Investing in land priced below the market is the alternative adopted by lawyer and businessman Fabio Alem. He started investing with family and friends, and has been setting up groups of investors to take advantage of opportunities.

“We usually buy land in more stressful situations, at auction or from someone who needs to sell. We buy, develop the project, build and sell to anyone interested in ready-made property, both commercial and residential”, explains the lawyer.

He says that one of the greatest precautions is the search for serious companies to develop the project, assessing who will invest. “The big risk you have here is the work not being completed, so the most important thing is to study well and know with whom you are negotiating and with whom you are investing.”

Real estate investment funds are a long-term option

The FII (Real Estate Investment Fund) is also an investment option. “It is a form of indirect acquisition. Through the acquisition of quotas, the buyer enjoys the income arising from the property”, says lawyer Fernanda Amaral, who works in the real estate segment and in the capital market.

The specialist indicates that there are advantages in this type of investment, such as the possibility of exemption from income tax on earnings, professional management of properties and the possibility of selling the fund’s quotas in fractions, just to meet the needs of the investor.

Fernanda also points to a lower risk of vacancy if the FII has more than one property. “It’s different from own property which, if vacated by the tenant, will burden the owner with charges such as condominium fees, user expenses and taxes.”

Despite the advantages, financial planner Luciano Wajchenberg analyzes that the current moment, with high interest rates, is not conducive to short-term investments in real estate funds, but rather thinking in the long term.

Considering the Ifix (Real Estate Investment Fund Index) accumulated between 2012 and 2020, the expert points out that, in the short term, there is little difference between investing in an FII and buying a property for rent.

When is the consortium worth it?

Consortium and financing costs must be compared, as well as buyer preferences.

“The consortia are generally recommended for those who are not in a hurry to acquire the property, as you depend on the contemplation draw or have to pay a high entry bid”, says Wajchenberg.

On the other hand, financing is generally released after credit analysis. “It is the fastest way, however, more bureaucratic and costly, requiring a minimum down payment of 20% of the value of the property.”

The terms and fees involved in the payment also vary, and the support of an expert is recommended to calculate the advantages and disadvantages of each opportunity, as well as suitability to the preferences and personal objectives of each investor.

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