The idea of investing can be intimidating but it’s an important part of saving for various financial goals and building wealth. There are a number of investment opportunities available in the market. Certain investments carry more risk than others. But there is an investment that has been risk-free over the years, and that is Real Estate.
Real estate has the potential to deliver very high returns in the long run. It can provide a steady cash flow and several tax benefits.
We have listed below some of the many advantages that real estate offers over other investment classes.
- Passive & Steady source of income: Demand for rental housing is rising. This demand is expected to increase in the coming years, making rental units a steady income source.
- Provides ample liquidity: Property is also used as collateral to raise loans. Since loans against property (LAPs) are secured, they are cheaper than personal loans (unsecured) and available for longer tenures.
- Power of leverage: Unlike other investment options such as bonds, mutual funds, or stocks, one can invest more than his current net worth in real estate. One can easily purchase a property worth more than his current net worth by making only 20-30% of the down payment. This leverage makes property investment a viable opportunity for aspiring investors.
The main purpose of buying real estate as an investment is to make a profit. So, to keep it a profitable investment, keep these 5 things in mind before investing in property:
- Analyse your credit score before applying for a loan
- Weigh the full cost of investment
- Avoid impulse buying
- Do good personal research and due diligence
- Always compare ROI on other forms of investment, such as mutual funds, savings, equity, etc.
Logout