Investing in Real Estate

3 Reasons Why Investing in Real Estate Helps

July 3rd, 2021


Everyone looks for better investments and investing in Real Estate is one of them, whether you buy residential such as Birla Niyaara Worli, Mahindra Meridian Alibaug, Mahindra Happinest Kalyan, SOBHA Sentosa Panathur Bangalore, Lodha Crown Thane Majiwada, Mahindra Tathawade Pune, SOBHA Windsor Whitefield Bangalore, Mahindra Kanakapura Road or Industrial Plots like Reliance Industrial Plots.

For a person looking to make long term investments, key asset classes available including commodities, fixed-deposits, equities and real estate.

From an asset allotments perspective, specialists advise that one should spread out their investments to reduce the risks and ideally have a mix of physical investments as well as financial assets present in the portfolio. When it comes to physical assets, real estate has always been among the top most favorite for investments.

Investing in Real Estate

Why investment in real estate helps?

Whether it is investment property or commercial rental property, with the limited availability of land, increasing population and people migration from one city to another, reality investments has a great potential. Although, the government’s push for affordable housing, tax rebates and subsidies offered, as well as low rate-of-interest offered by banks, makes real estate an attractive investment. One can benefit by real estate investment in many ways. You will receive rental yield and also its value will appreciate with the time and the development of the location.

1. Secure investment

Contrast other investment assets, real estate is less evaporative since it's not traded. A study tackle by the Jordà Schularick Taylor Macrohistory Database funded by the Institute for New Economic Thinking (INET) assets that ‘residential real estate, not equity, has been the best long run investment over the course of modern history’. Also, with the rate of interest on home loans being the lowest ever in the past 15 years, now is perfect time to invest in the real estate.

You are also probably to get a nice deal on the property, since with a bid to give momentum to the market; many developers have come up with attractive schemes and big deals. For example, considering customer feedback that the key hindrances to home ownership are high upfront down payment and paying both the rent and EMI together, Lodha Homes has introduced ‘Apna Ghar, Apna Desh’ initiative. It provides the option of a very low down payment, low interest rates of 5.99% on EMIs and ready to move in homes where one doesn't pay rent and pre EMI at the same time

2. Rentals

Presently, the net-rental yields in Mumbai, Bengaluru and National Capital Region (NCR) are around 2-3%, according to 2019 Knight Frank and Khaitan & Co. report. With the national average of 3%, the rental yields in India are more than in Beijing, Singapore and Hong-Kong. Usually, investing in affordable to mid segment properties will bring you greater rental yields, supply external factors like location, reputation of builder, infra-development are aligned.

Also, with the government drafting a rental law, interests of capitalist will be protected with the rules and regulations in the rental segment streamlined. Additionally, there are a couple of tax benefits while calculating tax on the rental income.

3. Tax Benefits

Real estate investments have a lot of tax benefits devoted to it including section 80 C where you can assert advantages on paying the principal amount of the home loan, section 24, where you can assert tax benefits on the interest on the home loan that you pay for. Also, first time home buyers can assert a tax proceeding on interest paid under section 80EEA. Nevertheless, this provision is for investing in a property in the affordable housing segment whose value is Rs 45 lakh or lesser and other conditions need to be satisfied.

Factors that should be keep in mind when investing in Real Estate

  • Research
  • Do a rigorous homework on the location, configuration, the profits expected from the investment, the rental yield and then zero in on the project. Do check on the forthcoming locations as they may be affordable to purchase currently and may give you good returns in future. Check you enter into Real Estate transaction with a reputed RERA certified branded developer.

  • Plan your financials
  • Of the total money that you have allotted to invest, first determine on how much you want to reroute to Real Estate and then take your action accordingly. In contrast to other assets like mutual funds or fixed deposits, entering into real estate is a large investment and mainly requires borrowing. In this way, it can inhabit large part of your overall financial portfolio, which can be little bit risky if not well thought of.

  • Difficult diversification
  • In contrast to mutual funds, diversification is tough in case of physical real estate.

    About Admin

    Noopur writes the content on real-estate from several years and she is one of the few writers who provide the thought-provoking content on best properties deals.