From the time we have started earning, we have always listened to things like investment in property.
You will get very good returns and we have also heard things like if you have invested in property your life is sorted, no other investment option is as good as real estate. In this article we are going to talk about this in detail.
- Is property really that great investment?
- Why investing in property is so popular in India?
- Benefits of investing in real estates
- Other investment option compared to real estate?
- Why investors are going towards market funds and ditching real estate?
Is property really that great investment?
Investment in real estate depends on property to property. I am in the real estate field from past years, I have met a lot of persons in my office who have shared their experience.
There are some success stories and some failure stories which I have noticed by myself, its not a study it completely belongs to my own experience.
My own short story
I have started working in December 2017 in this field. I was doing job at a company located at zirakpur, Mohali (Punjab), and the owner of the company was Sikh man of around 50-55 years.
There was a staff of 5 peoples including me, he was doing this business for more than 20 years but he has just started it with the team. One day I was sitting with him in his cabin and got to know about his story, let’s dive into his story.
He lived in a small village in Punjab, in search of work he shifted to Mohali and here he started working in a real estate agency where he did the job for around 1 year and after that, he started his own company and in the first year he has witnessed too much loss, in the second year he did a very good job in selling and he sold his land in his village and then invested that money into real estate, where he got a lot of success.
In the present day he owns around 7 showrooms 1 project where he has around 200 homes for sale that too in the good area of Mohali. And yes like a coin this field also has 2 sides, one is good and there is a bad side also.
I have also met other investors who have lost almost there everything because of disputed land, and some have purchased property at so high prices that now they are not even on the stage to get the money they have invested.
So doing investment in real estate you have to take care of many things, which we are going to talk in detail in the next part of this topic.
Why investing in property is so popular in India?
Investing in property is one of the most common ways to invest in India.
Investing is so popular in this field is so popular because it offers good returns in a long period of time with low risk.
Investment in real estate requires a big amount of money, but investing in it is very easy now as easy funding of loans at a very good interest rate.
The interest rate is so low in real estate as the interest rate in the study loan is even higher than this.
However if we opt for the loan the final cost after there payment of the loan is very higher and some times you even pay around 100% interest of the principal amount.
One more thing why real estate is so popular is the “APNA GHAR” thing as Indians think that their own home is the must thing in India.
Benefits of investing in real estates
this is the increase in the value of property from the price at which it was bought. Over the time price of real estate has increased due to a number of reasons.
This allows the investor to earn a good amount of return over the investment. But this takes a lot of time.
many people invest in real estate to earn rental income or save themselves from rent. Properties can be rented out top different types of people to earn rent from them, and some peoples use that rent to pay the EMI of the investment.
And some people invest in real estate to save themselves from rent, people think that instead of paying rent they can pay EMI of that properties, and in this scenario after some specific that property will belong to them and they don’t have to pay the rent.
some peoples trade in real estate, like trading in share market trading is also done in the real estate market.
In this investors invest their money in some undervalued property and then trade with them, Although this type of trading needs a lot of experience and you need a lot of money for this.
This type of trading is very risky. You have to check a lot of things before investing in this because your one bad deal can make you a huge loss.
A combination of capital appreciation and rental income is a very good scenario for an investor, rent will pay the EMI and capital appreciation can help which inflation and is direct profit.
Other investment option compared to real estate?
Investment in real estate gives you no surety will the market go up or go down.
There are many options other than investing in real estate. There are options like share market, mutual founds, provident funds, gold, bonds and fixed deposits.
In this investment options some offer more growth than real estate or some offer less than this, it is said to be the higher the risk the higher the profit, the lower the risk the less is the profit, but it’s not true every time some times low-risk investments tend to the better one.
Share market is affecting the market of real estate, for a period of times it is seen that many investors are going towards share market and mutual funds instead of real estate, there are a lot of reasons for that as well, let’s talk about that
Why investors are going towards market funds and ditching real estate?
- Real estate needs a big amount of investment as this is a capital extensive sector, on the other hand in case of the other two options one can even start with a very small amount also.
- Investment in the market is riskier than real estate, but in a long period of time, it is seen that if invested in the market for the long term then there is low risk if we look at previous data.
- Awareness of the market is increasing day by day, if we talk about 10 years ago there are only a few number of persons who have good knowledge about the market but in today’s technology era you can gain knowledge about it anywhere.
- By doing investment in market you are actually investing in the growth of country.
- Real estate is going down day by day after demonetization and is going very low, the demand in the sector is going down and the price is not, that’s why.
- Managing property and tenants is full of hassle and most investors don’t have that much time and they don’t want to go through this trouble and thus they want to try some other types of investment.
You should invest in real estate if you want to, but before investing you have to keep in mind some things that you should check all the legal papers of the property, and research before buying, don’t buy real estate too fast after shortlisting a property get to know about the area, chances of development.
What is the rent going on that area, are you getting the property for normal price or lower than its market price.
As you know that real estate is going down and due to the corona virus pandemic the market is going to crash in this segment.
So you should think twice, the chances of a market crash are around 20% and the price fall can even be till 25%. If you are a potential buyer and you have job security and you were looking for a property, then I can be the right time for you, only if you want to invest in the long term.
As the market will start going up slowly after all this and you will get properties at very discounted prices of around 25%.
And also make sure one thing that you should diversify your portfolio. Real estate should be only 30-35% of your portfolio.
Yes, you can invest in real estate but keep in mind that you are doing a big investment. So be careful before investment.
you should invest in both. investment in real estate is a bit secure than the market funds, but in market funds you get more return.
Your portfolio should be well diversified. your portfolio should have different investment tools.