Every investor that approaches real estate has, at some point, asked whether real estate was the ideal choice for them. Real estate investments do have enough strength to make you a millionaire but only when approached smartly.
While real estate investments are one of the most secure and highly profitable investments out there, not everyone who buys a property becomes a millionaire. Some are also met with disappointment, home loans, and empty bank accounts. I’m not trying to scare you away, that is just what’s up out there.
If you are wondering how some investors are luckier than others, let me tell you, it isn’t about luck either. It’s about the approach you take while investing.
Wealth Generators in Real Estate
Depending on what strategy you adopt, there are four “wealth generators” that everyone should know about, these are
Cash flow is the primary motive, and also one of the first results of every investment. In a real estate investment, there are many other expenses involved, be it an emergency fund, monthly maintenance, or other regular management.
You will have to work with your current cash flow in such a way that you can pay for these expenses, even if you have some dry months with no tenants in your rental property.
When the value of a property increases in the market, it is called appreciation.
Appreciations are the one boon of investment that you will only find in real estate, that gives owners an immediate upper hand in the market. While appreciation alone cannot make you a billionaire, it is still an added benefit.
Forced appreciation (Fix and Flip)
The natural process of appreciation can take a long time, sometimes even 20 years. Forced appreciation is the process where a property is physically improved to raise its value in the market, like “fix and flip” where you purchase an undervalued or run-down property, fix it up and then sell it at a much higher price.
When you buy property on a mortgage and rent it out, you can easily pay it off with the rent your tenant is paying to you on a monthly basis. If you buy a property worth 10 crores and rent it, and you also go on to use that monthly income to pay down the mortgage, 5 or 10 years in the future, you have a property worth 10 crores that you didn’t even pay for.
To promote investments in real estate, the government gives a lot of tax benefits to the buyers, some of the latest trends are examples. You can easily save up a lot of tax on your added income.
Now the key is to know how to use these four wealth generators in your favor and come up with a smart plan to generate wealth at a quick pace. You will also have to use your asset as an asset to generate wealth from it.
How to Make Money in Real Estate?
Real estate is one of the best ways one can build wealth if you take the time to understand the process and educate yourself about the dos and don’ts of investing to get great returns. And you don’t even need to have a really large sum of money to start, many investors just start with the first down payment and then move up with a lot of effort and confidence in their ways.
Here are some of the best methods you can employ to reach one step closer to your dream:
A classic way of making money, this investment is a favorite of many Indian investors including NRIs. In such investments, you can make money by renting your property, for long or short terms to the tenants.
In India, the market is also growing fast due to the rising population of home renters in urban locations. As youngsters move to big cities in search of employment and education, they will be needing a place they can rent to live for some time, making rental residential properties highly demanded.
Commercial office spaces are also one of the most sought-after properties, making rental properties a superior choice.
Commercial real estate crowdfunding is a very popular investment option amongst Indian investors and realtors. Here, multiple investors pool their money to create capital for investment in a CRE property.
Some benefits of Crowdfunding are:
- The high liquidity of the investment makes encashing your share much easier in times of need.
- As you are only funding a small amount with many other investors the price of investment as well as the risks is shared.
- If you invest through a good real estate platform, you can also expect high returns and asset security.
- Apart from giving high security to your assets, Assetmonk also performs the CRE property’s due diligence on the investor’s behalf to ensure a safe and hassle-free investment experience.
When you invest a smaller amount in a highly secure investment class, you can also take advantage of these small investments and use them to diversify your portfolio.
As most of the paperwork is supervised and completed by the investment company itself, Crowdfunding is a Hassle-free investment.
Real Estate Mutual Funds and ETFs
You can buy ETFs and also mutual funds that are broadly diversified, or you can buy ETFs and Mutual funds already invested in real estate, some of these also invest in real estate developers and property managers.
All these investments will be managed by fund managers and so this too is a hassle-free investment option. These, too, are highly liquid and low-cost investments.
Making money through Fractional Ownership
While it has been prevalent in America for many years, fractional ownership is still a very new idea for Indian investors. Similar to crowdfunding, it is a form of investment; this is an investment where multiple investors pool their assets to invest in larger CRE properties.
Fractional ownership has proven its worth as a quality investment option for beginners, as it allows investors to start from an amount as small as 25 lakh and generate high returns, this is not just an affordable investment, but also a high yielding one along with CRE grade asset appreciation.
Assetmonk is a real estate investment platform that takes great prestige in its history of happy customers. Along With providing asset security, the company takes all measures to make an investor’s experience hassle-free and worth it. Assetmonk also promises an annual IRR of 12-21% on all its investments.
How to Become a Millionaire Through Real Estate Investments FAQ’S
Any purchase, ownership, or management of real estate properties that one participates in, in order to earn an income is called a real estate investment.
As some investment classes in real estate offer very high long-term returns, you can rely on these to earn well and become a millionaire.
You can buy real estate shares by investing in good fractional ownership and crowdfunding a CRE project.
One can also purchase and invest in rental properties to build a passive income.
When it comes to meeting tax requirements, buyers must pay the applicable GST on their property purchase in addition to property taxes. Several adjustments to the GST regime aimed at the real estate sector have been introduced in recent years. To make an informed decision about investing in this industry, potential investors and homebuyers must examine the impact of GST on real estate.
Due to the complicated nature of GST, several myths are being spread in the market to fool customers. Here is what you should know.
Reasons why NRIs are moving to Indian Commercial Real Estate ✓ Growing market ✓ Urban development policies ✓ Growing demand for office spaces ✓ MNCs in India ✓ Government reforms in favor of Foreign Investors
What factors should you consider while selecting an investment tool? In reality, it all boils down to a few factors: the duration of the investment, the volatility of the investment, the risk of the investment, and the validity of the investment. We compared investments in equities, real estate, and digital assets for these factors.
Investing in commercial properties such as apartment buildings, hotels, vacation homes, resorts, and office spaces to earn high rents or income. The pandemic taught us many important lessons, but most of all, it reminded us of the importance of having multiple income sources, especially a large corpus of regular passive income to keep us afloat in case of emergencies.
Which is the better investment: rental property or REITs? ✓ Adding real estate to your investment portfolio can help you diversify, increase profits, and even hedge against inflation risk ✓ When it comes to investing in real estate, though, you have a few options. Rental property and real estate investment trusts are two of the most common real estate investing options (REITs)
Fractional property ownership, being a relatively newer topic in India, has been through a lot of speculations and questions based on the norms and regulations surrounding it.
An investment is only good enough as long as it gives high returns, in the context of real estate investments via fractional ownership, planning an exit route becomes very easy.
Fractional ownership is a relatively newer idea for Indian investors, which also makes it subject to speculation. As misconceptions breed around the topic, more and more people distance themselves from the investment class for their disadvantage.
The biggest investment in India’s real estate sector by an international private equity (PE) recently has caused a lot of activity that might be in your favour.
Property investment is not only limited to buying and selling properties. It is also about generating a steady rental income. An ideal property is one that keeps appreciating in value until it is sold off. Hence, property management is essential.
REITs, in comparison to direct real estate investments, allow investors to make affordable investments by purchasing highly liquid shares of the property. The income tax norms also provide reit investors with indexation benefits and much more.
Development plans are taken at major airports across the world. Many cities around the world have developed an aerotropolis of their own. About 80 aerotropolis towns and aerotropolis cities are operating and developing around the globe.
REITs are good portfolio diversifiers that can help enhance returns and minimize overall portfolio risk.
A REIT is a hybrid investment product with features of equity and debt. It’s a way to get both regular income and capital appreciation.
With more NBFC banks jumping on the low home loan bandwagon, real estate companies forecast a new booming holiday season, while some are concerned about lower home loan rates.
Right when commercial offices and co-working spaces were going to expand, the world went standstill due to the pandemic. The new normal has not just changed our perception of what is right or wrong but also made everyone unsure.
A real estate investment is made successful by the interplay of many factors. While the location is truly a major component in making the investment possible, it is not the only one.
Regardless of whether it is for end-use or just investment, some crucial elements must be taken into consideration when investing in commercial real estate.
Residential real estate property in Mumbai hit its highest recorded sale in India, in the past 10 years, in July 2021. A substantial reason for this are millennials, whose reaction to the pandemic highlighted the change of mindset.