Why Invest in Real Estate?
For a person looking to make long-term investments,key asset classes available include commodities, fixed deposits, equities, and real estate. From an asset allocation perspective, experts advise that one should spread out their investments to reduce 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 favorite for investments.
Why investment in real estate helps?
With limited availability of land, increasing population and people migration from one city to another, realty investment has an upside potential. Moreover, the government’s push for affordable housing, tax rebates and subsidies offered, as well as lower rate of interest offered by banks, makes real estate an attractive investment. One can benefit by real estate investment in multiple ways. You will earn rental yield and also its value will appreciate with time and development of location.
Secure investment: Compared other investment assets, real estate is less volatile since it is not traded. A study undertaken by Jordà-Schularick-Taylor Macrohistory Database funded by the Institute for New Economic Thinking (INET) asserts that ‘residential real estate, not equity, has been the best long- run investment over the course of modern history’. Additionally, with the rate of interest on home loans being lowest ever in the past 15 years, now is good time to invest in real estate.
You are also likely to get a good deal on the property, since with a bid to give momentum to the market, many developers have come up with attractive schemes and deals. For instance, considering consumer feedback that the key impediments to home ownership are high upfront down payment and paying both rent and EMI together, Lodha Group has launched ‘Apna Ghar, Apna Desh’ initiative. It offers the option of a very low down payment, low interest rates of 5.99% on EMIs and ready-to-move-in homes where one does not pay rent and pre-EMI at the same time.
Rentals: Currently, the net rental yields in Mumbai, Bengaluru and National Capital Region (NCR) are around 2- 3% per cent, according to 2019 Knight Frank and Khaitan & Co report. With the national average of 3% percent, the rental yields in India are higher than in Beijing, Singapore and Hong Kong. Generally, investing in affordable to mid-segment properties will bring you higher rental yields, provided external factors like location, reputation of the builder, infra development are aligned.
Additionally, with the government drafting a new rental law, interests of investors will be protected with the rules and regulations in the rental segment streamlined. Also, there are a couple of tax benefits while calculating tax on rental income.
Tax Benefits: Real estate investments have a lot of tax benefits attached to it including section 80 C where you can claim benefits on paying the principal amount of the home loan, section 24, where you can claim tax benefits on the interest on the home loan that you pay for. Also, first time home buyers can claim a tax deduction on interest paid under section 80EEA. However, this facility 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 fulfilled.
Factors to keep in mind when investing in real estate
Research: Do a thorough homework on the location, configuration, the returns expected of the investment, the rental yield and then zero in on the project. Do check on the upcoming locations as they may be less expensive to purchase presently and may give you good returns in future. Ensure you enter into real estate transaction with a reputed RERA certified branded developer.
Plan your financials: Of the total money that you have allocated to invest, first decide on how much you want to divert to real estate and then take action accordingly. Unlike other asset classes like mutual funds or fixed deposits, entering into real estate is a large investment and mostly requires borrowing. Thus, it can occupy a large part of your overall financial portfolio, which can be risky if not well thought of. Transaction costs like stamp duty and registration need to be factored in.
Difficult diversification: Unlike mutual funds, diversification is difficult in case of physical real estate.
Articles series powered by Housing.com
TAGS
Similar Blog Posts
4 Mistakes To Avoid While Bu...
Buying a home is akin to fulfilling a lifelong dream for most people. Since it’s a huge investm
TAGS
The Advantages Of Choosing A...
When it comes to buying a home, the decision can be overwhelming. Not only is it one of the large
TAGS
Things to Look Out for When ...
The process of home buying has undergone a sea of change for the better. Today, you will find the
TAGS
Real Estate Investing In Ind...
Real estate investing can be a great way to generate income, build wealth, and diversify your inv
TAGS
Is It Wise To Buy A House In...
Prices of real estate in India have experienced a significant rise in recent years, lea
TAGS
6 Ways You Can Save Money Fo...
Having an own home is a dream of many. It is often considered as a sign of stability. Buying a ho
TAGS
Should you buy a residential...
Bangalore, now known as Bengaluru, is India’s IT capital. The city is also known as the Silicon
TAGS
Building the life of your dr...
Embarking on the journey of finding a new home is an exhilarating opportunity to shape the life y
TAGS
What are Homebuyers Looking ...
In 2021, the Indian residential sector made a solid comeback, with house sales in the top seven c
TAGS
Empowering Women Homebuyers:...
The decision to buy a home can be a major financial commitment, but for women living in Maharasht
TAGS
Ready-to-move-in vs. under c...
One of the most common dilemma you face when buying a house is whether to invest in a ready-to-mo
TAGS
Budget 2023-24- Key Takeaway...
Finance Minister Nirmala Sitharaman presented the Union Budget for FY2023-2024, which aims to dri
TAGS
Guide for NRIs to invest in ...
The Indian real estate industry is expected to grow to a $650 billion business by 2025. This also
TAGS
5 Reasons Why NRIs Should Co...
India is a land of diverse cultures and cities. With the growth of the economy and infrastructure
TAGS
Smart Cities: Digital Transf...
World over, there are several cities that are transforming themselves and providing better lives
TAGS
Why Should NRIs Invest In In...
Working abroad usually means a great paycheck. A large portion of the paycheck is usually left fo
TAGS
An Ultimate 7-Steps Guide To...
Buying a home is often considered a major milestone in one's life. It’s also a huge financial d
TAGS
Mumbai – top destination f...
Mumbai is the capital city of Maharashtra and a city that is the land of dreams. It is known for
TAGS
An Essential Guide To BHK- F...
It is relatively common in India, to describe your home in terms of BHK rather than the actual sq
TAGS
Things to consider when choo...
Once you have zeroed in on the property that matches with your preferences of a developer, budget
TAGS
The Tax Benefits of Taking a...
Owning a house is a dream for almost everyone. And to help people realise this dream, the state a
TAGS
A Step-by-Step Guide to Payi...
Paying property tax is an important responsibility of every property owner. It is a for
TAGS
Know How to Calculate Home L...
Thanks to several government initiatives like reduction in stamp duty and other tax benefits, the
TAGS
Why Should NRIs Invest in a ...
Indians always preferred investing in real estate, and with the sector in India reclaiming its po
TAGS
Complete Guide to Paying Pro...
Paying property tax is a mandatory obligation for all property owners in Pune. The Pune Municipal
TAGS
Your Guide for Buying a Week...
Usually located within couple of hours drive from the city, weekend homes are set amidst nature a
TAGS
Living Pune
Paying property tax in Thane...
Property tax is a tax that is levied on the value of a property, which is usually paid by the own
TAGS
Benefits of Buying a Flat in...
For many, the idea of buying a flat in the heart of Mumbai is the ultimate fulfilment, but most h
TAGS
Effortless Ways to Make Mumb...
In the fast-paced city of Mumbai, managing property taxes can often seem like a daunting task. Bu
TAGS
Understanding ‘Floor a Spa...
A first-time new homebuyer is faced with lots of jargon, which is seemingly technical in nature b
TAGS
How To Pay KDMC Property Tax...
If you own a property in Kalyan-Dombivli Municipal Corporation (KDMC), paying your property tax o
TAGS
New GST rates – Explained...
The Goods and Services Tax Council had previously announced a reduction in the tax on under-const
TAGS
Commercial
Why Mumbai’s Western Subur...
It’s no secret that Mumbai’s real estate market is booming. Property registrations in 2022, a
TAGS
What is the Importance of Oc...
An occupancy certificate (OC) is a crucial document that certifies that a building has been const
TAGS
6 Reasons why you should inv...
Real estate as the name alludes to is “real”. A tangible asset, it provides a sense of stabil
TAGS
Your Guide To Stamp Duty And...
The real estate market in namma Bengaluru is vibrant as ever. According to a recent report by Ana
TAGS
MahaRERA Project Search: How...
Real Estate (Regulation and Development) Act, 2016, commonly known as RERA, was launched by the I
TAGS
Trends in Real estate 2022...
The real estate market saw a fantastic 2021. Rising knowledge about the need for more space, heal
TAGS
Vastu Homes – Vastu Tips T...
Vastu Shastra is an ancient Indian science of architecture and design that has been around for ov
TAGS
Lodha - Building A Better Li...
We have stringent anti-corruption, anti-bribery and anti-money laundering polices at Lodha.
TAGS
All You Must Know About Avai...
Home loan is by far the most common type of loan that’s availed by individual
TAGS
Buying a House Post Covid? 5...
The COVID pandemic has brought about sweeping changes in our lives. It has compelled us to view t
TAGS
Integrated Township – All ...
A well-developed township offers a plethora of advantages – a great community, better quality o
TAGS
Top 8 Reasons Why You Are Ri...
COVID-19 has undeniably made us realise the value of having a home for our own. On the other hand
TAGS
Tips to Repay Your Home Loan...
Despite the recent reduction of interest rates on home loans by most banks and NBFCs, the burden
TAGS
COVID-19 has Led to the Grow...
The 2020 coronavirus pandemic has made nations across the world execute lockdowns and social dist
TAGS
Ideal Age To Buy A Home- Sho...
Owning a home continues to be a priority for most Indians. However, this is step is generally tak
