Real estate is one of the top three leading investment options preferred by Indians. Among the various options available, Investing in land is the most preferred asset class. Real estate is a tangible asset. It is a piece of Investing in land with construction on it. Apart from buying for personal use, it is also a major source of investment that provides good returns over the long term.
Advantages of Investing in Real Estate:
Fixed Income If you buy a property and rent it, it guarantees you a regular income. The saying ‘Landlords usually earn while they sleep’ is 100% true. You can earn a steady income without doing anything. However, this income depends on the type of Real estate, its location, size, etc.
Appreciates over time There are only a few asset classes that appreciate only over time. Two assets like gold and real estate. Be that as it may, barring some exceptional circumstances, real estate prices are bound to rise shortly. If you buy a property today and sell it two years later, you will surely get a lot of money in return
Investing in land can be a promising long-term investment strategy, as land tends to appreciate in value over time. Increase in income over time It is not only the value of the real estate but also the income from it that increases over time. This means there is a steady rise in the rent for your property. This increase depends on the overall rise in real estate prices
Tax Benefits Every income you earn is taxable to some extent. But when income comes from property, it gives you maximum tax benefit. You pay less tax on such income as compared to other sources of income
Disadvantages of Investing in Land:
Deciding to invest in real estate takes a lot of time, choosing the most suitable property, collecting the necessary funds, and transferring ownership – all this takes a lot of time. The whole process is difficult at times
For Long-Term Investors Only If you want short-term returns, real estate investments are not for you. For people who want quick and volatile returns on their investments, real estate is the least desirable destination. This investment requires more patience from the investor.
Financial leverage Buying real estate is easy using financial leverage. It needs to invest the borrowed working capital with the hope of higher returns in the future. You can use financial influence very well in this field
Easy to buy Even though the actual cost of real estate is very high, you can still buy it at a reasonable price. This means that purchasing real estate does not require a large amount of funds. Loans and mortgages are common ways to finance real estate purchases
Protection Against Inflation As inflation rises in any economy, the costs of holding investments also rise. But not so with real estate. When inflation increases in the economy, the value of real estate rises without any change in the price of ownership. The income from it rises, but not the cost of it.