Why is Real Estate Investment the best investment in future?
Real estate investment helps in expanding investment portfolio and offset the violated investments. It is essential to expand your investment portfolio. Investing all hardships in one basket can be a deal of loss. However, by diversifying your options in multiple areas like an exchange-traded fund, stock market, or real estate, the chances of an increment in income are higher than the loss.
However, there is a myth around the corner that Real estate investment could be a better idea! It is scary, as raising funds in real estate can need a lot of money; no, it is not true; here, we are up with some significant reasons why investing in real estate cannot be a wrong decision.
Why is Real Estate Investment the best investment in future?
Stable source of income: It is analyzed that post covid comeback, the demand for home buying, luxury homes or rental places has significantly increased. And one of the major reasons is offices reopening. Rental housing needs have witnessed good growth – 29.4% quarter-on-quarter and 84.4% year-over-year. On the other hand, the average rent on home buying has also seen a spike in its rate for the April-June quarter – 8.4% quarter-on-quarter.
Moreover, it is estimated that the demand for rental housing will increase in the upcoming year, turning it into a good source of income.
Adding to the topic, it is proven economically that if a currency’s purchasing power falls due to significant setbacks like inflation or some microeconomic trends, then the Real estate venture is stable enough to fight against the capital loss. The data of the Reserve Bank of India says that between 2001-2021 the property rates in the major cities across the country have seen an increment of an average of 15.1%.
However, the average inflation rate between those years was around 6.15% also. India has seen so many economically challenged disasters like corona pandemic, the 2008 financial crisis or demonetization or introduction of the Real Estate Regulatory Authority (RERA), after that the Real Estate sector has successfully bounced back stronger, bringing back the confidence of all lost investors and bringing in some renewed trust in the industry as well.
The latest reports disclosed that the aggregate demand had seen a reasonable rate of increase in the 13 major cities across the country. The analysis said the index hike shot up around 16.9% quarter-over-quarter and 27.7% year-over-year. And the average residential home buying rates also increased in these cities up to 2.4% quarter-over-quarter and 8.0%year-over-year, manifesting the vigorous growth of the sector.
Tax Benefits: Like most business sectors, Real estate is also privileged to enjoy a few tax benefits. However, the investment cycle works a little differently – you run a business when you purchase a home and rent it out. And that turns you into a landlord, which means the company’s owner.
Being the landlord of the rental place, you have the advantage of writing off the following expenses:
- Maintenance expenses of the site.
- The mortgage return on loan.
- Origination points on loan.
- Depreciation amount (which has been almost spread in the market for over 27.5 years).
- HOA dues.
- Real estate taxes.
- Homeowner’s insurance.
However, it is always wise to first have a mouthful conversation with your tax advisor before concluding that all benefits are applicable. The advantages differ from one Real estate investment to another. Although investing in this sector has always been beneficial for investors. The tax benefits are limited when discussing investing in stocks or bonds. If you sell any asset in loss, then you can only write off capital losses in the accounting books.
Leverage power: One of the leading reasons to invest in the Real estate sector is that the business can be financed through debts. Notably, differentiating from other investment sectors like mutual funds or stocks, the person has the leverage to invest more than her current net worth in the real estate sector. Most lenders need hardly 20 to 30% as a down payment. This benefit turns property investment guides aspiring investors to look upon Real estate as a trustworthy investing sector. Moreover, this leverage power advantage comes with a great deal of providing home loans at the lowest price rate of 7-8%, as the most affordable credit. The advantage doubles if the house is given on rent or occupied by people.
Financial security: While investing in the market, a person cannot feel secure about the income or benefit from the fund. However, 2020 was an eye-opener for everyone, especially in the marketing sector, where money is raised as a profitable investment. Within a blink of an eye, the person feels the top of the world, and the other everything goes in the loss.
Although, in Real estate investment, terms and conditions differ slightly from the rest. Here, if the person raises the fund for a long time, then they are doubling the asset’s value. If we talk about house buying or housing, the sector bounces back irrespective of all cons happening in the market if the deal is more prolonged.
There are quite a lot of people in the market who do Real estate investment as a post-content retirement life. Whether the person earns income from the monthly rental policy or sells the property owned for many years once they are retired is a win-win situation. The income security is always there with that person in either case.
Some feel financial security knowing they have raised the fund in a safe environment, and the chances of loss are almost negligible.
Overall, Real estate investment helps in expanding investment portfolio and offset the violated investments. However, a background check or talking with the advocate or tax advisor is always essential to avoid illiquidity and transparency. Check the market price appropriately, and do a proper background check. Referring to a reliable data study or advisory is highly recom Why is Real Esate Investment the best investment in future?