When creating wealth, few will argue against real estate investment in India, especially when we consider the potential returns. While this is the case, one thing to keep in mind is the relative illiquidity of the product. There are a number of investments that can help compensate for the time it takes to liquidate real estate.
Real Estate is Real
In contrast, real estate, as an investment can be viewed, touched and felt as physical assets rather than something virtual as stocks or cryptocurrencies. More importantly, it remains an investment that stands the test of time, having endured the most recent upheaval in the stock market.
Making Wealth Through Real Estate
Even volatile or difficult property markets will still offer sort of a stable value of a beneficial asset. Real estate can earn a person’s income on a continuous basis whether or not it is occupied or not, making it a safer investment in the long term.
Limited Supply of Land
The fundamental and primary appeal of real estate lies in the fact that the amount of land available is limited. As PEs emerge, the demand for serene and functional environments only grows, as does the population and demand for land. Unlike other investment assets, more land cannot simply be created.
Control Over Investment
Papers assets do not provide control over the investment the same way real estate does. The paper assets do not appreciate in value the same way real estate does. Real estate is an active investment which brings forth an element of a personal responsibility.
Real Estate for Portfolio Expansion
Including real estate to your investment portfolio offers the advantage of risk diversification. This would in turn reduce the risk of other investment markets and therefore help in the generation of wealth.
Desired Investment Zone
When making investment in real estate, one has the option of selecting areas with great potential as the returns on investment over the years are high. Properties situated within the “Desired Investment Zone” have a greater appreciation factor which is worth investing in for the long run.
Real Estate Investment Opportunities
Direct ownership is just one of several ways to invest in real estate:
- Rental housing
- Office space, shops, stores rental
- Shares of companies in the real estate sector or REITs and ETFs of real estate
- Debt capital funds including mortgage debt funds and real estate debt funds
All the above come under different categories and each has its own advantages allowing one to invest and capitalize in real estate on a certain scale.
Tax Planning using Geographical Expansion
For instance, by purchasing a few units in different cities, a real estate investor is able to geographically diversify his portfolio. This strategy minimizes risks associated with certain local factors such as pollution or a falling economy.
The Power of Leverage
Real estate perpetually increases in price with inflation. Rather, owing a property makes loss due to inflation more tolerable since the cost of renting will also increase. Good properties are during the decades with high demand are usually located in zones with greatly appreciating prices.
Value Appreciation
Real estate generally tends to appreciate over a longer term and hence helps in providing a hedge against inflation. Even in india, resdential properties have seen a steady increase in value especially in tier-2 cities and metropolitan cities.
Cost Escalation Pass-Thru
Passing on the rising expenses to the tenants aids real estate investors to keep their earnings in an inflationary situation. This is also the case for residential and commercial properties where rental charges are reviewed upwards once every year.
Targeted Returns with Low Risk
The bulk of real estate investments fit the requirement of regular and long-term growth being inherent in properties. The combination of both investment in income and appreciation gives an edge to real estate as an investment.
Lesser Variability
Real estate has a lower range of variability when compared with stocks, as a result of which prices do not fluctuate widely over a short period of time. Such gradual movements are more desirable for low-risk investors than for investors with higher risk tolerance.
Reliability of Income Generation
Passive income generation is apparently one of the most important features of real estate. Cash flows in from rental properties, covering the costs and giving returns, making it perfect for passive income.
Using Real Estate to Achieve Financial Freedom
Real Estate is important in terms of building up an investment portfolio that also serves future generations. It allows for the use of leverage, which permits an enormous increase in assets even with a small outlay, such as in property, unlike stocks or bonds.
Keep more with help of Tax Benefits
The tax benefits that Indian real estate markets provide to the investors are quite substantial and add to an increasing wealth accumulation by enabling investors to keep more of their earnings making real estate, a wealth enhancing, tax fiduciary investment.
Therefore, real estate investment is characterized by the ability to provide high returns and the provision of safety features, which explain its popularity in the growth of wealth amongst many investors across the globe.
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