Real Estate Investing In India: Risks, Rewards, And How It Compares To Equities
Are you considering investing in real estate? Here's what you need to know about real estate…
Real estate investing can be a great way to generate income, build wealth, and diversify your investment portfolio in India. However, as with any investment, it's important to understand the potential risks and rewards before diving in.
Of course, it's important to note that real estate investing in India also has risks. Property values can decrease, making it difficult to sell a property for a profit. Additionally, finding tenants and dealing with unexpected repairs can be challenging and costly. It's also important to note that real estate investing can be more hands-on than other types of investments, as it requires significant time and effort to research and purchase properties, screen tenants, and manage repairs.
In this article, we'll explore why one should consider investing in real estate in India. Let’s dive into it:
1. Value Appreciation
One of the biggest reasons people invest in real estate in India is the potential for appreciation. Real estate can appreciate over time, providing the potential for long-term capital gains. This can be a significant source of wealth for investors who can hold onto their properties for several years. For example, if you purchase a property for INR 1 crore and it appreciates to INR 1.5 crore over a period of 10 years, you've made an INR 50 lakh profit simply by owning the property. This is in contrast to investing in equities, where the value of your investment can fluctuate dramatically over short periods of time.
2. Income Generation
Real estate can generate income through rent payments, providing a steady stream of cash flow. This can be particularly appealing for investors who are looking for a reliable source of income that they can count on. For example, if you purchase a property for INR 1 crore and rent it out for INR 50,000 per month, you'll be generating INR 6 lakh per year in rental income. This is in contrast to investing in equities, where dividends can be unpredictable and subject to change.
3. Tax Benefits
Real estate investing in India also offers tax benefits that can make it more attractive than other types of investments. For example, real estate investors may be able to take advantage of tax deductions for mortgage interest and depreciation. This can help to reduce the overall cost of owning a property and increase cash flow. In contrast, equities do not typically offer the same level of tax benefits, and investors may be subject to higher taxes on their returns.
4. Portfolio Diversification
Diversification is another essential benefit of real estate investing in India. Real estate can add diversity to an investment portfolio and potentially reduce overall risk. By investing in different types of properties in other locations, investors can spread their risk and potentially reduce their exposure to market fluctuations. This is in contrast to investing in equities, where an investor may be heavily invested in a single company or sector, which can be risky if that company or sector performs poorly.
5. Tangible Asset
Real estate is also a tangible asset that can appeal to some investors. Unlike equities, which are simply a stake in a company, real estate is something that can be seen and touched. This can provide a sense of security for some investors, as they can physically see the property they own and understand its value.
6. Building Equity
Each mortgage payment you make helps to build equity in your property, which can be used as collateral for future loans or investments. This can help you to save money and build wealth over time.
In conclusion, real estate investing in India can be a great way to generate income, build wealth, and diversify your investment portfolio. However, it's important to understand the potential risks and rewards before diving in. By considering the potential for appreciation, income generation, tax benefits, diversification, and the tangible nature of real estate, investors in India can make more informed decisions about whether or not to invest in real estate.
TAGS
Similar Blog Posts
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
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
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
Why Invest in Real Estate?...
From an asset allocation perspective, experts advise that one should spread out their investments
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
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
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
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
