Did you know that Real estate is the world’s largest asset class? overcoming even the precious metals and other assets like shares and government bonds.
Basics Of Real Estate Investing Explained
Real Estate is buying and selling of land and the structures on it, with the aim of making money. Real estate doesn’t just involve buying and selling a house or land for yourself. It is more rewarding when considered as an investment option.
Real estate has served as the best income-producing asset over the years. The fact that it appreciates over time, regular income, and low-risk profile in the long run made real estate an attractive option. Real estate is a very common investment vehicle with reliable and diverse investment options. Rewards for your investments vary depending on the level of risks involved and the quality of due diligence done. Assetmonk makes sure proper checks are done before listing any asset on the platform.
As most of the investment options, Real Estate is also dependent on the risk-taking capability of the investor. There are diverse investment options based on the risk tolerance of the investor, from properties from zero risks with a minimum yield to Greenfield properties with higher risk and double-digit yield. Typical risks involved are approval risk, construction/ completion risk, tenancy risk, valuation risk, title risk and liquidity risk. Assetmonk does a range of risk metrics as a part of its due diligence process.
Types of Investments
Typically, there are two ways of investing in real estate, one is directly investing in a property and the other is investing in collective investment vehicles operated by a third party. Usually, the small investors go with the second option by investing in a collective investment vehicle as they cannot invest in a huge property directly. Collective investment vehicles can be funds, REITS, debentures etc.
Assets Types and Revenue Options
Primary income sources can be tenancy income and capital appreciation. Depending on the type of assets, the primary income source can vary. Listed below is a table detailing the types of real estate investments based on their utility and their common income sources.
Who Can Invest In Real Estate
Even though the Real estate is an age-old practice of investment, investments with large returns are limited to large professional players like banks, insurance companies, etc. due to requirements like capital, due diligence, access etc and only in the recent times are these getting available to smaller players and individual investors through platforms like Assetmonk.
Unlike the stock market Real estate doesn’t respond quickly to the market changes. Only long term changes in the domestic market, the economy of the country, and the population affect real estate in a certain way. So, if you are looking for long run investment options Real estate is an ideal deal.
May not be possible overnight but Real estate surely offers high returns with low risk in the long run. Real estate over the years has emerged as an attractive investment option. Though investment seems tricky and tough, with proper guidance, knowledge and maybe professional help it can help you make a good amount of money.
Real Estate Investment FAQs:
Real Estate basics include the awareness of types of Real Estate, multiple investment avenues in Real Estate, tax laws related to real estate and the process to get started.
Investing in Real Estate depends wholly on the budget that investor is ready to invest in. It can start from as low as 3lakhs. Investors through fractional ownership can even invest in huge commercial properties with as low as 5 lakhs.
It depends on the preference of the investor. If you are conservative investor and are looking for regular passive income then residential properties are best. If you want high growth along with high rentals then you can invest in commercial properties but these are slightly riskier.
You can start investing in Real Estate by directly buying a property or can invest in REITs that manage property on your behalf. Online crowdfunding and private equity platforms are great avenues for investment. You can invest through these platforms.