Updated 23 October, 2022

What's a real estate asset?

Before investing in real estate, it is advisable to become familiar with their characteristics. Here we explain them to you.

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Real estate assets can be apartments, houses, warehouses, parking lots, lands, and so on.

Assets v/s liabilities

An asset can be any type of resource that generates wealth, such as an apartment that can be rented, or a share in the stock market. So, if the car you bought is not a money maker, but only a constant expense between gas, insurance and maintenance, then that car is definitely a liability. The same applies with a last generation cellphone for which you got indebted and that is not useful as an income source. These products may be amazing for the first two years, but by the third year they are not worth the same as the latest model.

Protected against inflation

Similarly, when there is inflation and the value of money decreases, your saved cash has less value to buy what you want because it has lost value over time. Real estate assets are valued in UF, so their worth isn’t undermined by inflation. When you are investing in a real estate asset using financial leverage, you are basically using a liability to get an asset that will help you pay off that initial debt.

Is this a good time to invest?

After all of the above, you may still have some doubts about whether it's a good time to invest your money. The answer is yes, it is always a good time to unfreeze your money from your checking account and start growing it in some asset. To expand on the above, and deepen the understanding on why is it always a good time to invest, we’ll think about the distinction between “time” and “weather”: Time means atmospheric phenomena in a short period of time, such as a rainy day or a cloudy weekend. In terms of investments, we can think of credit rate fluctuations or political uncertainty in a time interval shorter than five years. Weather, on the other hand, represents the usual behavior of the atmosphere during long periods of time. The weather in Arizona is warm, for example. It has always been like this. In terms of investments, the minor fluctuations are irrelevant to the global behavior of the real estate investment. This is why it is understood as a long term investment. I want to tell you some reasons why real estate investment is great and why it is so simple: Why invest in real estate?

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