The Practical Reason Behind Investing In Indian Real Estate in 2022

Owning real estate in India has long been connected with prestige, money, and credibility. It was, along with gold, the most secure manner of protecting one’s fortune.

Share on facebook
Share on twitter
Share on linkedin

As we progressed into the contemporary period, a plethora of new investment opportunities emerged. Stocks, bonds, fixed deposits, mutual funds, digital or cryptocurrency, and other choices provided investors with a variety of places to lodge their money. However, among all of them, real estate remains one of the most stable and profitable options for long-term, profitable investment.

To some extent, we are all aware of the potential financial benefits of real estate investing. There are several advantages to investing in real estate that exceed the costs, and you as a real estate investor may be receiving a consistent stream of income to achieve financial freedom in the long run.

Whether you want to quit your boring 9-5 job and become a full-time real estate investor or save for retirement, you are on the right track to accomplishing your financial objectives sooner than you would imagine. It just takes one rental property to launch your real estate firm and secure a consistent stream of rental revenue.

When it comes to investing, there are several options available. Real Estate Property investment is one of them. Investing in real estate is a great option to consider as it comes with several advantages, which makes it distinct from other investment options. It offers investors several financial benefits as the return rate of investments is higher because of practical leverage, and investing in rental properties can also earn you a stable income. Real estate also provides foreseeable cash flow as it appreciates. It also offers equity growth through abridge. This article provides you with a list of reasons for investing in real estate property.

What are the Top benefits of real estate investment?

  • Capital Appreciation:

One of the most important characteristic features of real estate is that it appreciates over time. Imbue in the field of real estate is generally long-term financial security. Capital appreciation can be defined as a portion of the investment for which the market price exceeds the original purchase price or cost. Capital appreciation can occur for many different reasons in different markets and forte classes. The phenomenon of capital value appreciation or increase of a property’s market value over some time happens because of various components, including:

  • They impart ultimatum dynamics of a specific location.
  • How monetary inflation is behaving?
  • The dividend rates banks charge for home loans, meaning the cost of borrowing.
  • The enlargement of new footing or other new real estate market drivers such as schools, shopping malls, airports, or increased public transport facilities in a specific area.
  • Increase in local citizens, leading to increased stimulation

Don’t miss: How to pick the best investment for Rental Income and Capital Appreciation: Residential or Commercial Real Estate?

  • Steady Income:

    This is not something new! The majority of real estate investors invest with the objective of a steady income or flow of cash. The passive income may be earned from renting activities, which is a massive incentive to the investor. By investing in the correct location, you will earn a substantial amount of money to cover the cost and make some additional monetary benefits out of your investment. Urban cities or towns with colleges and universities may earn you higher income as the demand is high in these areas. Do not limit yourself to just one rental property and invest in multiple residential properties to increase your profit margin and diversify your investment portfolio. Suppose you are a beginner or find the entire task of investing in real estate a workload. In that case, you can always take the assistance of a real estate agent or any professional in property management.

  • Portfolio Diversification:

    Real estate provides investors a chance to diversify their portfolios. Real estate sometimes has a low and, in some instances, a negative correlation to the other prominent asset classes. It implies that by adding real estate to your portfolio, you can lower your portfolio volatility and earn a higher return per unit of risk. The primary function of portfolio diversification is to decrease the consequences on your investments, specifically unsystematic risk. Unsystematic risk, also known as specific risk, is a risk that is related to a specific company or market segment. It is the risk you sought to eliminate by diversifying your portfolio, and by doing so, all your investments would not be affected when a particular market event occurs. Portfolio diversification is the core creed of investing and is pivotal for better risk management. There are many benefits to diversification. However, it must be done with the most care.

Don’t miss 4 Ways in Which Fractional Realty Can Help You Diversify Your Portfolio.

  • Hedge against market volatility:

    It has been observed that during a down market, there is only roughly a 40% link between real estate and equities. When assets have a low correlation, they are less likely to rise and fall at the same time, which is why real estate is sometimes suggested as a hedge against stock market volatility.

  • Cash flow for retirement years:

    When done correctly, real estate investing is a reliable method to build wealth over time. Among the several advantages of real estate investing is the ability to generate income flow during retirement. This implies that the revenue from your rental properties might assist complement your retirement years.

  • Long-term financial security:

    Another important benefit of investing in real estate is that it is long-term financial security. Owning a property provides the investors with a feeling of pride and security as the property’s value appreciates over time as both land and buildings are appreciable assets. However, there is no explicit guarantee that the value of the property will appreciate indefinitely. Thus, you must conduct thorough research before choosing a location and closing a deal.

  • Tax benefits:

    One of the significant advantages of investing in real estate is that there are several exemptions granted to real estate investors. For example, rental property is exempted from self-employment tax. Additionally, tax deductions are granted on the grounds of property depreciation, insurance, maintenance, repairs, property tax, legal fee, etc. Despite all this, one of the best reasons why you should invest in real estate is that you become entitled to a lower tax rate for your long-term investments.

Don’t miss: How to invest in real estate smartly to save tax?

  • Inflation Hedge:

    Another reason why you should invest in real estate is that it provides you with a hedge against inflation. When inflation is high, the value of your property increases. Thus, the investors expect high inflation rates to increase their returns as the cost of living rises.

  • Real Estate Leverage:

    The process of using different financial instruments, options, or borrowed capital to increase the potential return of your investment is known as leverage. A 20% payment as a down payment on a mortgage can earn you your dream home. The main reason for this is that real estate property is a tangible asset and can serve as collateral as the financing is made readily available. The advantages provided by leveraged debt to real estate investing are threefold. First among the benefits is that leveraging debt allows one to acquire property that you wouldn’t or else can afford right away. The second benefit is that leveraged investments can earn an impressive profit rate (both directly and indirectly), at least notably more so than if you’ve acquired the property through monetary means. Lastly is the tax convenience obtained from paying off the interest portion of debts, which are customarily listed as expenses. This would create a tax target that would help you keep as much of your investment gains as possible.

  • Real Estate Investment Trusts (REITs):

    Real estate investment trusts (REITs) are a crucial thought when constructing any impartiality or fixed-income portfolio. They provide greater diversification, dormant increased total profits, and lower overall risk. In short, their capacity to produce dividend income along with capital appreciation marks them as an excellent countervail to stocks, bonds, and cash.

Despite all the benefits, investing in real estate also has certain drawbacks. One main drawback is that it lacks liquidity. Unlike the investments made in stocks and bonds, the real estate sector’s investments may take months to complete.

Yet, real estate is considered a distinct forte class that is simple to understand and can have a greater risk and returns portfolio. Real estate also offers tax breaks, equity building, steady income, appraisals, hedge against inflation, leverage, etc. Real estate is also one of the sought ways to diversify the investor’s portfolio as it lowers volatility irrespective of whether you invest in physical properties or REITs.

How To Get Started in Real Estate

Just a considerable amount of knowledge about the real estate industry; its legal, financial, and regulatory aspects, and a budget are all that you need for investing in real estate.

  1. Pick a budget: Real estate investment is done mostly for the purpose of improving your finances. So the initial step would be to decide the budget of your investment. When purchasing real estate for investment purposes, you need to consider the cost of taxes, utilities, upkeep, and repairs.
  2. Careful property assessment: Choose the right property to invest in which will cater to your investment objective. Real estate offers many kinds of properties appealing to every type of investor. Investing in real estate is usually all about capital growth and also generating regular income, so choosing a property that is more likely to increase in value is the most important decision you will make.
  3. Start small: Initially as you start investing in Real estate, remember to take small steps. Start off with a small budget and low-risk properties and once you get comfortable and find your feet in this sector you go about it full-fledged. Taking risks initially will not help in the long journey.
  4. Diversify the risk: Do not put all your eggs in one basket. Diversifying the risk is one of the key moves of investment. Invest in different types of properties and explore different vehicles of investment to diversify the risk involved in the investment. Also, you will get to diversify your investment portfolio. Even if not possible overnight, Real estate investment is a great way to develop wealth and improve your cash flow over time. Investing in real estate in India is one of the best ways to achieve wealth and financial freedom. Proper guidance, knowledge, and maybe professional help can help you make a good amount of money.

Assetmonk is an online platform revolutionizing Real Estate investment options in prominent cities like Bangalore, Hyderabad, and Chennai. We offer products for long-term and short-term investments. Visit our website for more details.

Real Estate Investing FAQs:

Real Estate is a good investment option that provides regular passive income along with capital appreciation. Investors can choose properties according to their preference of risk and tenure. Multiple investment avenues and investment plans make Real Estate a unique investment option.

The first step for getting started would be to choose the right investment vehicle, then pick a suitable budget. Choose an investment that aligns with your personal objectives. Also try diversifying your investments to avoid risk.

Related Articles

National Pension Scheme tier 1 account

National Pension Scheme Tier 2 Account

National Pension Scheme Tier 2 is a long-term investment scheme offered by the Government of India. It is a voluntary savings scheme where an individual can save for his/her retirement. The scheme is open to all citizens of India who are above the age of 18 years. The scheme has a lock-in period of 5 years, after which the account can be withdrawn. The scheme offers various benefits such as tax benefits, flexibility in investment and withdrawal, and a government guarantee. Tier 2 accounts can be opened with any of the authorized banks and financial institutions. The account can be opened with a minimum balance of Rs.500. The account can be opened online, offline, or through the Point of Sale (PoS) terminal. What is a National Pension Scheme Tier 2 Account? A National Pension Scheme Tier 2 account is a retirement savings account that offers you the flexibility to make partial withdrawals and deposits. This account is ideal for those…

Read more
istockphoto 636187984 612x612 1

National Savings Certificate Interest Rate 2023

National Savings Certificate (NSC) is a government-backed savings product available in India. NSC interest rates are determined by the government, and they offer a fixed rate of return over the life of the investment. The current interest rate for NSC is 6.8% per year. NSC interest rates are subject to change, but they have remained relatively stable over the past few years. In 2023, the interest rate is scheduled to increase to 6.8% per year. This will be the first interest rate increase since 2016, when the interest rate was increased from 7.6% to 7.9%. NSCs are a popular savings option for Indian citizens, as they offer a guaranteed rate of return and are backed by the government. If you are looking for a safe and secure investment option, NSCs may be a good option for you. Also, read NSC – National Savings Certificate. How the interest rates on National Savings Certificates have changed over time? If you’re looking for…

Read more
istockphoto 1136161903 612x612 1

Post Office Tax Saving Scheme

The post office tax savings schemes are a government-sponsored investment plan in India. Under the schemes, investors can save taxes by investing in specific post office savings instruments. The schemes are currently available in all post offices across the country. The schemes offer several benefits to investors, including tax exemption on the invested amount, interest income, and capital gains. Investors can choose from a variety of post office saving instruments, including fixed deposits, National Savings Certificates, and Public Provident Funds. The post office tax saving scheme is a great way to save taxes and grow your money. If you are looking for a safe and secure investment option, this scheme is worth considering. Also read Post Office Time Deposit. What are the Post Office Tax Saving Schemes in India? The post office tax saving schemes are a long-term investment plan offered by the Indian government. Under it, you can invest in various post office saving schemes and get income tax…

Read more
istockphoto 1439112216 612x612 1

EPF Form 5 for First-Time Employee Registration

What is EPF Form 5? EPF Form 5 is for First-Time Employee Registration. Each month, employers fill out EPF Form 5 with information on fresh hires from the previous month. These fresh hires qualify for the services of EPF.  Employee Provident Fund Organization applies to all companies in the organized sector industry with 20 and more workers. These companies must offer EPF facilities to qualified employees as well as deposit to their EDLI, EPS, and EPF. Each month, they must notify EPFO of new recruits entitled to EPF offerings by completing Form 5 and sending the form to the EPF Commissioner in their region. EPF Form 5 Details Objective Submitting information on a new EPFO member in a specific month Website Qualifying criteria Employee Provident Fund Organization’s authority should extend to the employers. Is it necessary? Yes. Who is required to fill out EPF Form 5? Employers. Time for filling out EPF Form 5? Each month. Submitting the details…

Read more
National Pension Scheme (NPS) India For NRI Investors | Assetmonk

How to Open NPS Account Online

Wondering how to Open NPS Account Online? But, firstly what is NPS? The National Pension System (NPS) is a social security scheme that may be accessed online. PFRDA  has control over NPS. Its goal is to provide financial rewards via pension after retirement. The federal government created NPS in 2014. NPS is a scheme that is based on contributions that provide retirees with returns that are linked to the market. Also read NPS Vs PPF: Comparison, Return Rates & Which is Better. How to Open NPS Account Online? An NPS account can be opened in 2 ways: Through the BankBazaar portal Through the NPS portal Also, read NPS Customer Cares Support Toll-Free and Contact Numbers. How to Open NPS Account Online: Through the BankBazaar portal Step 1: Go to on the BankBazaar portal. Step 2: Select ‘Investments’. Next, select ‘National Pension Scheme’. Step 3: You’ll be sent to a fresh webpage. Step 4: Click the ‘Create new account’ button.…

Read more
istockphoto 1364622197 612x612 1

LIC Jeevan Anand Vs PPF: What are the Differences?

LIC Jeevan Anand Vs PPF: What are the Differences? As can be seen, there are several sorts of investment routes, each with its own set of features and risk and return levels.  Investments linked to the markets are those invested in the markets. They provide returns that are not guaranteed. Fixed-income investments do not participate in the market and ensure returns that are guaranteed. These are typically preferred by those who are averse to market volatility, and if these avenues provide tax breaks. Section 80C of the 1961 Act provides several potential investment possibilities with tax advantages. The LIC Jeevan Anand and PPF plans are the most prominent options under Sec 80C. These plans have certain commonalities and distinctions that you should be aware of before investing. So, let us investigate LIC Jeevan Anand Vs PPF differences. LIC Jeevan Anand Is? LIC Jeevan Anand is a well-known life insurance product firm that provides a variety of insurance options. LIC Jeevan…

Read more