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Investment in Real Estate

Investment in Real Estate: a perspective for Indian investors & home-buyers [part-II]

This is part 2 of the article. Please read part I.

Investment in real estate can be rewarding and a wise choice to make in the long run! Whether you want to retain the property or sell it, you would normally never go wrong on a well-thought-out real estate investment.

In India, those who invested in residential real estate in the past 7 decades have only gained from it.

Besides, one simple yet compelling reason for investing in real estate is that ‘one should not put all the eggs in one basket by investing in volatile stocks and shares.’

Reasons that go in favour of investment in real estate-

1. Consistent and assured rental income possibility

  • Your monthly rent inflow: a big relief on your EMI
  • For example- if you have taken a home loan of Rs 1 crore for a property worth Rs 1.3 crore, your EMI each month will be approximately Rs 75,000 per month. With a rental income of about Rs 30,000, your outflow is minimized
  • Plus, your tax liability goes down with many tax benefits available on Home Loans in India (See part I of the article), which means you are effectively having a monthly outflow of less than Rs 20,000 per month to own a property worth Rs 1.3 crore which will continue appreciating as you repay your home loan
  • It is a known fact that home buyers on an average pay off their home loan in an average timeframe of about 10 years

2. Financial security for family

  • One thing that the pandemic has taught us is to keep some savings for a rainy day. Besides, home buyers are now willing to have bigger homes and keep aside money for their home
  • The importance of large spaces and a ‘home of your own’ has gone-up globally
  • Plus, with investment in real estate, the down-trend of your property won’t be irreversible
  • Property has a shelf life of over 100 years, especially, when you get a share of the land also along with the apartment you buy. Of course, with an independent home built on land, the gains remain high
  • The value of apartments also goes up over a period of time. For example, those families who bought an apartment in Mumbai almost 40 or 50 years back, are now getting handsome returns even on their old apartments. These old apartments are valuable because of the land prices on which these old apartments are built on
  • Investment in real estate is a long-term proposition. It is a forced saving and a very responsible way to lock your income into creating a long-term valuable asset
  • Buying real estate is a wealth-building proposition!
  • For this reason, many homebuyers invest in real estate to supplement their post-retirement income. Earning the monthly rental cash flow supplements your income. Selling your property is also an attractive option to make a profit
  • By and large, Indians feel more secure knowing their money is invested in a safe investment (real estate)
  • Leaving liquid cash in your bank account or investing the entire amount in the stock market is not wise!

3. Smart investments with assured appreciation and income options for the risk-averse investors

Some of the smart ways to invest in real estate include-

Buy an already low-priced, or undervalued property, renovate it, and sell it at a premium
Sometimes, just a few renovation tricks and repairs can do all the magic. All you need is an eye for smartly sighting an opportunity!
Some home buyers even turn into advisors and real expert experts by either brokering deals, or buying high-potential properties, and selling them at a profit
Some real estate investors, who are cash-rich book good projects at a pre-launch stage, and have an investment gestation period of 4 to 6 years. Once the possession is given, they sell these units at a premium
Builders are known to offer deals when the project is just launched, and it only gets higher and higher by the time possession is near. For example, within Sainikpuri, Hyderabad, an exclusive builder-floor which comes at a price of Rs 1.3 crore could appreciate over Rs 10 lacs by the time it is ready to move!
Investing in a Real Estate Investment Trust (REIT) is also a possibility in India now

[Source- https://www.goodreturns.in/ ]

4. Pass-on real estate property to your legal heirs

  • Many Indian families have grown rich just by holding on to their real estate investments over the last few decades, generation after generation!
  • The thrill of passing on your real estate investments to the next generation is amazing! Also, it’s a great way to secure their future, and to make sure they are never hard-pressed for money or a comfortable lifestyle for decades to come!
  • By buying and passing on your real estate assets to your loved ones, you build a legacy of your own!
  • Inheriting a real estate property gives your legal heirs a real asset that’s income-generating!
  • Capital appreciation is an irreversible process with real estate and a safety net for your family in difficult or unpredictable times!
  • Your legal heirs can choose to either keep the property or sell it to earn windfall gains

“Now, one thing I tell everyone is learn about real estate. Repeat after me. Real Estate provides the highest returns, the greatest values, and the least risk.

– Armstrong Williams

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To know more about “Real Estate Investment: A Perspective For Indian Investors & Home-Buyers [Part-I].Click here!

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