Why Real Estate is the Best Asset Class to Invest in
How to participate in real estate investments, renting your property, commercial real estate, real estate investment trusts (REITs), and more.
Real EstateInvestmentAsset ClassHousingPropertyReal Estate MumbaiSep 09, 2024
For any investment, having a long-term view is crucial. Real estate offers several benefits, including cash flow, tax benefits, and leverage. The segment is also known to generate cash flow, and with borrowed capital, potential returns on investment can be increased.
In the last 10 years, the real estate market in India has worked in favor of investors. According to a report by Knight Frank, the new launches in H1 2015 were around 1,20,000 units, while sales were around 1,30,000 units. In 2024, the new launches in H1 2024 were over 1,90,000 units, and sales were around 1,70,000 units.
Several factors are working in favor of real estate, including government initiatives such as affordable housing, growth of Tier-2 and Tier-3 cities, and deduction on tax on housing loans. The segment is also not as volatile as the stock market, and appreciation in market cost is steady.
Real estate offers better returns than fixed deposits and provides emotional security, which gold may not provide. Investors can participate in real estate investments through renting their property, commercial real estate, REITs, and more.
Housing.com POV With the current market situation, choosing the right real estate asset can provide good returns, a steady source of income, and tax benefits. It's essential to think long-term and diversify investments to mitigate risks.
Renting your property can generate a regular monthly income. Commercial real estate offers higher rental yields and longer lease durations. REITs allow investors to own a portion of a property and earn rental income without directly managing it.
A case in point is Raghuraj Singh, who bought a 2 BHK for Rs 53 lakh in 2013 and earned a rent of Rs 13,000 per month, which increased to Rs 25,000 per month after prepaying the loan.
Frequently Asked Questions
What are the tax advantages of real estate investment?
Real estate investment offers several tax advantages, including mortgage interest deduction and property tax deduction.
What are the different types of real estate investments?
Commercial, residential, and REITs are some of the real estate investments that can be explored.
How to start investing in real estate?
Before starting to invest, do a thorough market study, understand the jargons, and evaluate various options. Due diligence is essential, and it's recommended to hire a lawyer to understand nuances of real estate investing.
What are the risks of real estate investment?
Market fluctuations, tenant issues, management costs, and lower liquidity are some of the risks associated with real estate investment.
How does real estate generate steady income?
Real estate generates steady income through rental payments from tenants.
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