Amid coronavirus pandemic, real estate has once again emerged as the safest investment option. For Indians, owning a home has been traditionally considered a matter of prestige as well as safety.
The coronavirus pandemic that we are facing right now will change the mindset.
The post-pandemic world will be good for the real estate sector, the one sector that will emerge as the silver lining in such a bleak scenario.
India is now becoming the preferred investment destination for real estate developers. India poised to become second largest economy by 2050 – your investment in real estate will be extremely rewarding.
The benefits of investing in real estate are numerous. With well-chosen assets, investors can enjoy predictable regular passive income, excellent appreciation, tax advantages, and diversification.
Thinking about investing in real estate? Here’s what you need to know about real estate benefits and why real estate is considered a good investment.
1. Real estate appreciates in value.
Real estate tends to appreciate in value over time. Not only will the building or home itself likely grow in value, but the actual land that it’s built on will also usually be worth more over the years.
2. You can predict & establish a passive income source.
Because you can predict cash flow, you can also figure out ways to maximize revenue or cut expenses in order to establish a passive income source that will last as long as you own the property.
Rents also tend to rise over time, which can lead to higher cash flow.
3. Portfolio Diversification
If you’ve ever spoken to a financial planner about investing, then you are very aware of the importance of diversification. When you diversify your portfolio, you spread out the risk. Real estate will always serve as a safe tangible asset to mitigate the risk in your portfolio.
This means the addition of real estate to a portfolio of diversified assets can lower portfolio volatility and provide a higher return per unit of risk.
4. Real estate has a high tangible asset value.
There will always be value in your land, and value in your home. Home owners insurance will protect your investment in real estate, so be sure to get the best policy available so your asset is protected in the worst-case scenario.
5. Real Estate Leverage
Leverage is the use of various financial instruments or borrowed capital (e.g., debt) to increase an investment’s potential return. A 20% down payment on a mortgage, for example, gets you 100% of the house you want to buy—that’s leverage.
6. Good way to save for retirement.
A 30-year fixed loan allows you to build equity in your own home over a long period of time. If you decide to downsize when you’ve paid off your loan, it’s likely you can get a smaller house and have a nice chunk of change left for retirement.
7. Investing in Real Estate Is The Safest Option Globally
All over the world, real estate is considered one of the safest sectors to invest in. So regardless of temporary setbacks, it’s still the safest investment option – and will continue to grow in the long term.
8. Last but not least, numerous tax benefits.
Real estate investors can take advantage of numerous tax breaks and deductions that can save money at tax time.
You can get tax deductions on mortgage interest, cash flow from investment properties, operating expenses and costs, property taxes, insurance and other benefits.
Despite all the benefits of investing in real estate, there are small drawbacks. One of the main ones is the lack of liquidity. Unlike a stock or bond transaction, which can be buy/sell in seconds, a real estate transaction can take weeks or months to close.
Still, real estate is a distinct asset class that’s simple to understand and can enhance the risk-and-return profile of an investor’s portfolio.
An investment in real estate is not only a safe financial investment but also a pride & prestige of ownership holding; it is also an investment that can provide years of fun, happiness and priceless memories that will last a lifetime.