Real estate investment is a long term commitment that will in most cases remain as your asset that can gain from not just by value appraisal from time but through resource utilisation.
To put it simply, if you own a house, you get to live it in (eliminates rental expense) and in a few years it will increase in valuation; or if you own a farm land, you can gain from selling the crops you grow on it.
But, owning a real estate comes with its own sets of liabilities like taxes, maintenance charges, and insurance. You have to evaluate for yourself if your profits from the property are more than the expenses you put into it.
Why should you consider investing in property?
- A roof over your head is never an unnecessary investment. In case you already have a house, you can buy another and rent it out. This will bring you additional income that you can use to make more investments.
- Real estate investment is probably the simplest to understand when compared to stock markets or various schemes. It is always said that one should only invest in things one completely understands.
- Home loans are the cheapest. The government considers a house as a basic living requirement and is, therefore, cheaper than say, car loan or personal loan.
- A property is an asset that you can always take a loan against.
Ways in which you can gain from real estate investments
1. Value Appreciation
The strategy here is to buy a home in an upcoming neighbourhood. When there is higher demand, the price goes up. So suppose if a new corporate office is going to come up in an area, you can invest in a house there and sell it off when the demand gets really high.
Again, there are lot of risks involved in this proposition. If too many houses come up in the area, you may not get what you were expecting or if the corporate office deal goes wrong, the neighbourhood may never develop, leaving you right what you started with.
2. Rental income
You can let out your building as a commercial or residential space for monthly rent or lease basis. This kind of investment will need capital expenditure to provide the tenants with the furnishings or facilities required by the tenants.
3. Related income
Some people invest in a property or building abroad or a different city and let it out. Since they are not around to look after it, they hire experts to facilitate their business for a commission. Simple tasks like maintenance and booking in the case of a hotel business are let out for a percentage of share in the sales of the hotel rooms. The commission is given on the basis of per room sale.
4. "Flipping" the house property
Abandoned houses are the best example for this. Many people, especially those settled abroad cannot or do not want to visit their property in India, often sell it off. The property is left in a bad condition but has a potential to be renovated.
This is when you invest. But you will not only go into buying the property but also refurbishing or renovating it and eventually selling it for a profit.
5. Farm Produce
If you are able to employ manpower, you could also consider investing in a farmland. Each area is known for being suitable for a certain type of plantation.
If hiring manpower and cultivating it seems feasible, it will be a fruitful proposition. Farming could range from seasonal crops, tea plantation to flowers. You can get creative with it and turn the production into a successful business.
For those looking to settle down away from the city, it can turn into your future retirement home.