Updated at 2021-08-31 08:45:32 UTC
Though one of the oldest and traditional forms of investment, real estate is still considered one of the top asset classes in the world that still remains evergreen for every investor out there.
Apart from the fact that a real estate investment is not only secured but also offers high returns and tax benefits, here are some of the top reasons why you should consider investing in real estate.
Rentals – since you're buying a property for your own personal use, it will be rented out after every few years, giving you an added source of income. And along with time, with the rise in the value of these properties, you can eventually sell them to gain even higher returns. Even if there's no opportunity to sell the property anytime soon, renting out the property makes it a lucrative source of passive income.
Appreciation- when you in buildings like homes or offices located in high demand areas or business districts, they appreciate in value over time. It's a very simple concept when you think about it. With high demand for these properties, and other factors such as location, the property values will grow more than the money that you initially paid for it.
Security - investments in real estate are one of the safest forms of investment one can have. Since most people don't want to risk their own home or office space by offering them for rent, it becomes easier to put your rental property on lease once again before selling it off.
And with continued appreciation in real estate prices over the years (and even decades) makes a lucrative long term investment vehicle, especially for those looking for tax benefits and want to see their money grow over time.
Why is real estate better than stocks?
When you're comparing real estate with other investment options such as stocks, there are a number of things that you have to look at. First and foremost, consider the liquidity of an ETF fund when you want to withdraw your money.
In many cases, it becomes near impossible for someone to get their entire capital back when they want to sell their shares or bond investments. But in the case of real estate investment, if anything happens to your rental property or home you live in, selling off these properties doesn't take enough time as well as effort. You can easily rent out those properties and make them one effective source for both – rentals and capital appreciation/growth over time. This makes it quite simpler and easier for investors to look into long-term investments.
Why is Real Estate better than Debt Funds?
If you're wondering that if real estate is so hot, why would anyone invest their money in debt mutual funds? Well, for starters, with increasing inflation and prices of essential commodities, people are looking at debt investments such as FDs and RDs due to their liquidity. But when it comes to assets such as real estate, they are considered highly illiquid. The amount of time taken before someone can actually buy or sell off the property makes it quite complex an affair compared to other investment vehicles.
In addition, real estate also works best when it's used for rentals, while many debt investments result in generating taxable income, once again making them unfit for tax planning strategies.
Disadvantages of Real Estate as an Investment
While there are a great number of advantages that come with investing in real estate, there are certain downsides that investors should know about when they're looking to create their portfolios.
Property Maintenance Costs - since these investments don't generate regular income on the same scale compared to other assets such as FDs and RDOs, you'll have to pay more money from your pocket for repairs and renovations. This can be avoided if the investor is willing to look at smaller properties or homes instead of large ones.
Hire Purchase – one requires huge capital when you want to purchase big plots of land and commercial buildings. And this means that most individuals who are looking at purchasing property have taken loans from financial institutions. This type of financing requires regular monthly payments that are yet another expense to take care of.
Taxes – the amount of money that you have to pay as taxes on rental income can be a bit high for investors, especially when they're looking at both – short term and long term profits.
However, the margin for profit is far greater than the disadvantages, which makes it a pretty sweet deal. Earn money by investing in Real Estate
So, folks, that's pretty much about it about Real Estate Investments; we hope you liked it!