Innovation in real estate: How to turn safe haven assets into a triple win of returns

In the long term, the annual appreciation rates of real estate investments tend to be zero. INMSA’s disruptive model generates net returns of more than 10% on a yearly basis through sophisticated investments in developed markets. This is a great opportunity for Latin American investors seeking not only to protect their capital from the volatility of the pandemic but also to maximize it.
Historically, real estate investments were considered low-risk alternatives to diversify portfolios and maintain value against inflation. Through developers or real estate brokers, dealing with the production or sale of properties, the traditional investors acquire assets which are usually kept for a long time, having one single variable to increment their equity: their rental income. Such income is becoming increasingly lower around the world with an annual 3% average rate. For a sophisticated investor, this is old school. INMSA´s customized solutions include discount rates during the acquisition process as a fundamental variable and a strong appreciation rate which takes place after a crisis, offering a window of opportunity which depends on the cycles of the market.
With more than 15 years of experience and a track-record of more than 10% annual net profitability, INMSA manages the investments of Latin American families´ large portfolios in developed markets. Particularly in the USA and Spain. “We carry out the process from start to end: acquisition, management and sale of the assets. This process takes between 3 and 5 years, depending on the investor´s profile, the markets involved and the assets invested in, says Mariano Capellino, director of INMSA.
As it happened after the global crisis in 2008, the real estate market usually undergoes cyclical depression periods where banks, courts and governments auction all types of properties. Including reorganization and bankruptcy proceedings and even divorces, discount rates bring opportunities for those who are ready to grasp them. Based on a careful analysis of the market, INMSA has been able to close operations of up to 30% under the market price, plus a steep rebound curve. This expertise is combined with the management of assets: remodeling or repairing, and the administration of the rental process. “For those investors who are willing to obtain high returns and operate with our management processes, this model is superior”, says Capellino. But he also makes it clear that “management uncertainty does not mean risk: buying a remodeled property and with a tenant is riskier to us, as its value will be higher than a deteriorated and vacant property, but the possibility of adding value enables to increase the return on the investment”.
The global crisis of the coronavirus outbreak brings interesting opportunities in stable and legally secured markets such as Spain. With the drop of the GDP and the economic activity, banks start to release their inventory and opportunities are offered mainly in offices, stores and hotels. Instead, in the USA, a market with minimum inventory and strong volume of sales due to the recent reduction in loan interest rates, provides few opportunities and the city of Detroit continues to stand out after its bankruptcy in 2013 and it is still in the recovery process.
Opportunities are there, even during crises. You only need to know how to benefit from them.

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Source: Bank Magazine