If you’re thinking about investing in real estate, you’re about to embark on one of the best investment journeys of your lifetime. Here are the top reasons you should consider it, even if you’ve never invested in real estate before.
For your loved one’s secured future
Everyone thinks about their loved one’s financially secured future. That’s why they invest in many other investment plans, but they don’t think about real estate investment. But a real estate investment can give you many benefits like rental income, mortgage against the loan, tax benefit, huge ROI (Return on Investment) in the long run, you can start living in your own house so you can save your rental expenditure, a good resale value, etc.
Investment in Real Estate For your retirement
The meaning of retirement fund people think is PF or EPF only. But they don’t ever think about real estate investment as a retirement plan. People still think PF or EPF is the only option but real estate investment is far better than PPF or EPF. There was a time when the return on your PF or EPF used to be around 10-12% then yes it was the best option but for the time being it is not the best option nowadays. In real estate, you can get a 10% return easily in the long run in normal circumstances but if any government project starts near your property then the price of your property will increase exponentially. Then you can’t compare with any investment option.
For your child higher education
Nowadays everyone knows the cost of higher education is too high. Normally for B.Tech it costs around 10-30 lakh, for MBA 12-50 lakh for medical 30 lakh to 1cr etc. But after 10 years the cost will be 3-4 times more than now and after 20 years the cost will be 8-9 times more than now. So you will have to think about your child’s higher education from now on. In the long-run real estate is the only option that can fulfil your requirement.
For your daughter’s marriage
All the father wants a luxurious wedding for their daughter and everyone knows day by day the cost of marriage in India is increasing. So parents start thinking about their daughter from day one. As inflation is increasing, if the cost of a wedding in India nowadays is 20 lakh then after 10 years, its cost will be more than 40-50L and after 20 years its cost will be 1cr to 1.25cr. So if you buy a plot of Rs.10-12L now then the value of that property after 20 years will be a minimum of 90 lakh to 1cr.
To diversify your investment
You also have the option of diversification of your portfolio to minimize your risk, especially if you’re investing lots of money in other opportunities. Most experts recommend diversifying your portfolio. So you won’t lose everything in one fell swoop if the market where you’ve most heavily invested happens to go south. Real estate is an excellent place to park some of your money. A place is much safer than other investments.
- For your passive income
If you want a passive income from the property then there are two options – Either you invest in a residential apartment or commercial shop/office spaces. You can get a rental passive income from these two options. Renting makes real estate the best investment among all real estate investments, even if it is better than your government job because it doesn’t matter if you are ill or on a trip for vacation or miss happening with your guardian, or recession in the economy, a renting property will always give you a passive income as rent.
To show social status in your society
From ancient times to this modern era, property is the only real wealth. But in this modern era if there is something that matters in property, then it is location. Everyone wants a piece of plot or apartment or shop in cities because it differentiates you from other people in your society and it is also a kind of social status.
Secured investment with no risk
When you buy an undisputed property then yes it is an investment having no risk. Also, it will give you a better return than any FD.
Better return than the stock market
When you invest in intangible assets, like stocks or bonds, all you have to show for your investment is a piece of paper. You don’t have ownership of anything. If the stock market crashes, your piece of paper could be worth next to nothing.
Everyone thinks, that only the stock market can give you a high return but simultaneously you will have to think about the RISK. In the stock market, your money’s value may be decreased to zero or doubled in one month. Also, you must have some knowledge about the stock market and you will have to be updated on the latest news update.
Protection against inflation
In India inflation rate normally varies from 5-to 7%, and in some quarters it may be more than 7%. Return on all FD nowadays is less than 6% and day by day the interest rate on FD is decreasing because the REPO rate by RBI is decreasing. So it means the value of your money invested in FD decreases day by day by more than 1%. It means you are getting negative returns.
- You will get tax benefit
Like any business owner, real estate investors can take advantage of many tax write-offs. But, while it’s an investment, when you own a home and rent it out, you run a business – you are the landlord.
As the business owner, you can often write off the following expenses:
The mortgage interest is paid on the loan.
Origination points are paid on the loan.
Depreciation (spread out over 27.5 years).
Real estate taxes, homeowner’s insurance, and HOA dues.
Always talk to your tax advisor before assuming you can write expenses off, but know that investing in real estate is a benefit. When you invest in stocks or bonds, you can only write off any capital losses if you sell the asset for less than you paid for it.
If you invest in real estate, you have a tangible asset. Values may increase and decrease throughout the years – there’s no guarantee they will not fall, but tangible assets are worth something. You still have a piece of property to sell should you need to get out of the investment.
Since it’s a tangible asset, it takes a little longer to sell it since you need to work out a deal with a buyer and go through all the legalities. Still, in the end, you’ll walk away with your initial investment and hopefully a capital gain if all goes according to plan.
You can mortgage your property again any loan
A property is an asset that can be used in times of emergency. You can use your self-occupied residential or commercial property to borrow a loan. The property is used as collateral and the loan is disbursed by the lender as per the property value and your income to pay back the borrowed amount