We are not an ordinary Builder or Developer; we are Creators of Real Estate Investments. We help you invest your money in real assets – that's why it’s called Real Estate. Why we call them "Real Estate Investments" and not just "Investments"? Because INVESTMENT implies the following: you have invested money and you get an asset in return – something tangible, liquid, growing in value over time, and managed by the investor themselves (the one who invests the money).
You could argue that investing in stocks, cryptocurrencies, or mutual funds is also an investment, but it does not meet all of the criteria above. The investor does not control them. Of course, modern Fintech allows you to move your shares independently from Tesla to Facebook, from Amazon to Boeing – however, this is either for incredibly experienced people or for adrenaline lovers. The result is usually not so great. Not to mention the chance of bankruptcy and potential fraud of crypto exchanges (FTX being a recent example).
Perhaps you are still not fully convinced, so I let me give you a few examples:
Over the past 100 years, the Dow Jones index has grown by 1100%. In other words, for $1 invested 100 years ago in stocks, you would now have $11. That's a lot of growth, but there's the problem: the depreciation of money which reduced your profits significantly. We are not even talking about income tax, as B. Franklin said, “Nothing is certain but death and taxes”.
Moreover, what people often overlook is that only one company in the top dozen is still in the index: General Electric. The rest went bankrupt, disappeared, etc.
You can say: “what if we invest in currency, for example in US dollars?”. Here we meet the same problem – money depreciation. From 1900 to 2015 the US dollar lost 98.2% of its purchasing power. If we were to make a simple calculation (not quite the right way of doing it) and get a simple ratio, this would lead to an average devaluation of about 0.85% per year. So, if you invest in something that brings you more than 1% per year, then it sounds like a good investment, right? However, a more accurate calculation will be thinking of a hundred-year-old dollar which, in today’s economy, would give you the buying power of 1.8 cents. Therefore, the purchasing power of $11 today (from the example above) would only be the purchasing power of 20 cents back then. Surprising, isn't it? But let's go a little further.
Let's take a look at investing in precious metals:
Similarly, compared to the period of 115-120 years ago, gold has risen in price by 53.9 times. Suppose gold has not changed its intrinsic value, it therefore means that the dollar has depreciated against gold from a power of buying perspective by: 1.8% x 53.9 = 97%.
Now let's compare the above with the Real Estate Market:
To illustrate these numbers in a more tangible way, we could say that 115 years ago you could buy 114 one-bedroom apartments for the amount you pay today for 1 one-room apartment ($60,000 average price in the USA) – in the 1900s USA an average square meter of housing would cost about $16.4, therefore x 32 square meters = $525 for a one-bedroom apartment.
While the above calculations might have minor detail inaccuracies, they are generally correct.
Let's talk about investing in Romania. There is a lot of available data and it is easy to check. Let's talk about the modern period of the post-1990s. We believe that houses have not become more expensive, but the value of money has decreased. We also believe that it will continue to decrease because money is constantly being printed.
In 1995, you could buy a one-bedroom apartment for $5,000. How much is this apartment today? About $70,000. Yes, the "same" apartment (albeit a 25-year-old apartment).
Let's say you bought this apartment in 1995 and immediately rented it out. Your Return of Investment (ROI) would be 19% per year! $80/month = $960/year, $960/$5000 (invested) x 100 = 19%/year! What is the ROI today, in 2022? Only 6%!
$350 per month = $4200 per year.
$4,200 / $70,000 (invested) x 100 = 6%/year!
The only reason for that is that money is becoming cheaper and cheaper (more available, printed without internal gold reserves coverage).
Money printing leads to its depreciation, and in order to protect from depreciation, it’s then better to ‘not have’ them physically. Obviously, money is an important component of life, so do "have it" but invest in something that preserves its value. Investing in Real Estate is a resilient option, another option might even be investing in properties built by us... We could lie to you saying that due to the price growth from $5,000 to $70,000, you made $65,000 (1400%) in capital gains.
One could therefore think that they made a profit of $65,000. But this can only be true if, having sold the apartment for $70,000, you can immediately buy it for just $5,000. However, in real terms there is no earnings or capital gains. We prefer to say that the money has depreciated by 1300% but it has not affected you, because "you didn't really have them". We believe that to keep savings "under the mattress" in real fact means losing them and being fooled by their depreciation.
Now imagine that instead of paying $5,000 for an apartment you got a loan of $4,000 and your investment was only $1,000. In this case, having sold the apartment, the remaining $65,000 would be "a capital gain". Now if you want to buy this apartment again the bank will ask you for the same 20% down payment, which is $14,000 today, and lend you $56,000. This means you have 65,000 -14,000 = $51,000 left! THIS is really your money that you have earned due to your financial intelligence and investing skills.
We can go even more into details, subtracting the loan repayment from the gained rent payments of 25 years, but it wouldn’t change our key message. In this case we used the leverage of “other people's money” (there are other types of leverage you can use to increase the efficiency of your investments).
This is just an example. And we do believe it is an amazing mechanism for raising your capital – simple enough so that anyone can master it!
It really works. Several Investors have done this already with our support. They have bought one of our first stage houses with a mortgage, and sold them a few years later, having rented them out during the whole period. Their real profit developed from rental income and capital gains.
You can go even further. If you have a business that produces more than 5% per year (for example 20% per year), it is a good idea to rent a property for your permanent residence instead of purchasing it and therefore blocking your capital. Thus, the rent payments will be just an expense that reduces the business profit to 15% per year, but the released capital will increase your profit.
Renting has another advantage – it gives you the freedom not to own the house (renovation, investment in furniture, taxes, being bound to a certain place, etc.).
We have created My Corbeanca Rent project. This is a unique concept – renting not only the house itself, but also lifestyle extras (e.g. you can rent a bike instead of buying it, rent a barbecue and we will clean it after use, rent a inflatable pool only for the summer time, badminton, darts and many other things which are not necessary and sometimes expensive to buy). While you work and earn money, we can take care of your yard (an activity which can use your time and therefore money) – you just enjoy your yard. You are having rest – we are watering your lawn, washing the walkway, planting little flowers, changing tires, etc.
By the way, this is also a leverage – “other people's time”. And if you get bored with the country life – you can move out the very next day: no need to seek buyers for the house, no worries of where to leave the keys. YOU are FREE. If you just want a country house for a weekend, or a quiet place for your home office, or some comfort and fresh air for your kids or parents – why buy a house? Rent it! We have fully furnished houses that you can return when you no longer need them. Worth a try, isn't it?
