It is essential to do it calmly and in advance. Also, know your real estate plan and consult key indicators.
Free Book Preview Money-Smart Solopreneur
This book gives you the essential guide for easy-to-follow tips and strategies to create more financial success.
February 23, 2021 4 min read
Opinions expressed by Entrepreneur contributors are their own.
When buying or renting a home , it is important to compare before deciding between cities, areas or segments. This will help you choose correctly. Here is everything you need to know about it.
Leonardo González, Real Estate analyst at Propiedades.com, explains what when comparing:
- You know what the position of each zone is with respect to the market trend
- You improve the acquisition transaction
- You get the best possible home and pay a realistic price for it
How to compare?
It is essential to do it calmly and in advance. Also, know your real estate plan and consult key indicators. With them you decide in a simple, technical and transparent way.
Also, it is useful to compare two similar zones. For example Narvarte and Santa María la Ribera . In them, in addition to having middle segment homes:
- They have a central location in the metropolis
- High quality public services
- Wide range of properties for sale and rent
Narvarte or Santa María la Ribera, where to buy?
Not sure which part of the city suits you? On this occasion, the real estate portal Propiedades.com carried out an exercise where it compared between Santa María la Ribera and Narvarte. Two dynamic areas of the metropolis.
In case of acquiring an apartment, you must first check the Price-to-Rent (PtoR) of the two. It is the real estate indicator that explains whether it is more convenient to rent or buy in a certain area. For the CDMX, the reference value is 25.
The data reveal that, currently, it is a good time to buy an apartment in Santa María la Ribera and Narvarte. The PtoR of the two zones is less than 25. The first is at 13.5 and the second at 17.6.
If you want to do it in the shortest time possible, the option is Narvarte. According to the Price-to-Income (PtoI), in this area you require 4.5 years of income to buy a property if you spend 100 percent of what you receive. While in Santa María la Ribera you need 5.6 years.
If you prefer to buy as an investment
Is your plan to buy an apartment and then rent it? Then it will be useful to know the estimated profitability that you will obtain. For this, the ideal is to review the Gross Rental Profitability (RBA) of both areas. In Santa María la Ribera it is 7.4 percent and in Narvarte 5.2 percent. This means that the first is more profitable.
Another indicator that you should monitor when comparing is the Time on Market (ToM). With it you measure the estimated waiting time before closing a sale transaction. The Properties.com portal uses it to know how long an ad was active on the platform.
The data shows that an apartment in Narvarte is currently selling faster because the ToM is 60.3 days. While in Santa María la Ribera it is 78.8 days.
Take into account the capital gain
Finally, when comparing two zones it is essential that you observe the Capital Gain. So you will know if:
- The cost-benefit ratio is high
- What you paid for your home was fair
- Your home’s value increased or decreased over a year
Currently, Narvarte has better expectations, since its Capital Gain as of December 2020 was 0.82 percent. While Santa María la Ribera showed a decrease of 10.5 percent.
Lastly, knowing the costs helps you make a final decision. If you want to buy in the Santa María la Ribera area, you should know that it consists of six neighborhoods: The approximate prices of new and used apartments are:
On the other hand, Narvarte is made up of five colonies. Here, the prices of the new and used apartments:
Now you know how to choose between two dynamic places in the metropolis and choose the area that best suits your context and needs. It is time to take a pencil and paper to make your budget. Also, approach your financial advisor to make a successful purchase.