Sunday, 14 February 2016

Is Real Estate your Smartest Investment?

“Land is a scarce commodity; available in a finite amount and they ain’t making any more of it”. Thinking of this fact, we are sure that all of us realize that land is one resource that has no substitute and is one of the basic human needs along with roti and kapda. Real estate is one of the sure investments whose value always appreciates in long term. It is a general and very true saying that “You don’t wait to buy Real Estate; buy Real Estate and wait”.
If you are looking at stable gains for your money, it is time that you start looking at Real Estate as an investment. As per a lot of researches, real estate has given at least returns between 15- 20% per annum in the last decade. In good developing locations, after a period of 5 years, your real estate investment starts giving you return in terms of appreciation anywhere between 10-20 % per annum depending on the kind of investment you have done. While areas like Navi Mumbai and Gurgaon have seen an appreciation in prices; cities like Bangalore, Chennai have seen a good return on property. Tier 2 and Tier 3 cities are growing at a faster pace and will be coming up with good real estate prices and returns. The developing areas always give a good return on investment and thus the investors can also explore these options to make a smart investment. Even when prices fall and cash is scarce, a lot of schemes are available in real estate for investors which reap them a handsome profit when economy recovers. A lot of Real Estate investments just don’t fetch you appreciation but also give you monthly returns like rentals and lease income. There are a lot of other factors as well that make Real Estate as a king of investments and let explore why:

1.        Basic law of demand and supply: As and when the population will grow, the demand for Real Estate consequently increases. With the increase in the demand of real estate, the rents increase and thus result in higher prices of the land. In fact, whenever the economies grow and expand; it has a positive impact on the Real Estate growth. There is a reason why Real Estate is considered as a part of the bigger investment portfolio. It is a resource that has several qualities that enhance the returns.   

2.       A stable, non-volatile and a reliable income stream: If you think long –term, most of the real estate returns come from rental income which are surely less volatile than capital returns. Owning a home is actually a keystone for wealth as a result of its financial affluence and emotional security. Not only is it a reliable income source while you are yourself earning but also offers the comfort of steady income post employment. It is saying that “Landlords get rich in their sleep” and the statement stands true looking at the kind of financial security one gets from Real Estate investments.

3.       Scope of appreciation: Real Estate is one commodity that always appreciates in long –term. Numerous experts in real estate would agree to the fact that over a time period of ten years, real estate is one investment that has seen highest scale of appreciation in comparison to any other investment. Real estate is like a roller coaster ride. Every market sees a slump in the economy, but land prices have always been amongst the fastest to recover and gain momentum. 

4.       Risk platter is less: Owing a physical asset always gives you much more mental satisfaction over any financial asset like mutual funds/stocks.  Moreover, with Real Estate the risk platter is less. The value of your money is preserved and increases by investing in right asset class for long periods of time. Moreover, Real estate is one of the investments that allow leverage. Even if you pay only 20-30% of the entire cost of a property; you can easily control the income coming from the property along with the tag of the ownership of that property. It is a safe bet that you can play with minimum risk involved.

Thus Real Estate not only is one of the everlasting securities that you can have but is also an asset that is ever increasing in value. In real estate, the investment has to be long term, with a timeframe between 4-7 years to expect king size returns on your investment. To make the best of it, you as an investor also need to do some hard work, a lot of research and make a smart decision to make best out of it. Do not forget that every day when you wake up, it is your property only that is producing a safe and a stable income.

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