As a result, investors are always on the lookout for low-risk strategies to boost their holdings. When it comes to real estate, there is plenty of room for creative speculation. Putting money into real estate is no easy task. You should be aware of the potential dangers before becoming engaged.
If you’re diligent and patient, though, real estate can be a highly profitable investment. Despite the inherent dangers and costs, real estate investment is a safer bet than more conventional markets like the stock market.
Here, we look at some of the pros and cons of real estate investments.
Pros
1. Easy cash flow: If you acquire a property for investment purposes and decide to rent it out, you will receive rental income. This income source could be put towards the mortgage, saved for the future, or used for any number of other purposes.
2. Tax benefits: There are a number of deductions and credits you can claim on your taxes thanks to home loans. Purchasing a property is a wise investment, and the Indian government actively encourages this by providing tax breaks for mortgage interest payments under Section 80C.
3. Safe and Secure: As the value of real estate often doesn’t fluctuate frequently like that of other investments, buying it won’t keep you plagued with frequent checks and decision making. Investing in real estate provides a physical asset with measurable economic worth. Both personal and commercial use are viable options for getting the most out of your investment.
4. Value appreciation: It’s easier to make a snap choice to sell when the market is rising and your property’s value is increasing. Selling at a later date for a handsome profit after real estate value appreciation is common. Investment in real estate is secure since it generates a continuous income stream.
Cons
1. Suitable for long-term only: Real estate can’t be sold quickly for emergency funds. Buying and selling properties takes time, but if you’re patient, you’ll make money. Yet, you must have a long-term investment strategy, do your research, and diversify your portfolio.
2. Costs of maintenance: The owner must pay for property maintenance even if they rent it out. Property upkeep costs vary by types of properties. There are also entrance and exit costs. RERA guidelines vary charges for property registration and stamp duties by state.
3. Requires huge capital: If you want to invest in real estate, you should save up a lot of money for the down payment and closing costs as these have to be paid upfront while buying the estate.
In all, look for alternative options if you don’t know much about gold investment or equities. Real estate is the only investment where positives outweigh drawbacks and provide optimism in difficult times.