Appreciation of Value

Real estate, especially in urban areas, is bound to appreciate due to scarcity of land. It is said that the longer you stay invested in real estate, the more money you make. The value of a good real estate investment increases over time. Rents also typically increase every year, this ensures higher cash flow. History is proof that the real estate market is back on track, following even the most uncertain times. Be it the 2008 economic crisis or the recent period of the pandemic, the prices returned to the same level and even escalated further. Hence, real estate provides you with good control over your investments, unlike stocks where the risk of loss is high. If you buy a property today, even your children can use it years later. In this way, you can build generational wealth by purchasing real estate property. If you’re buying real estate as an investment, consider investing in high growth potential locations to maximise your returns. Panvel for instance would be a good long-term investment location, where the upcoming Navi Mumbai International Airport and the Trans Harbor sea link are bound to spur growth.

Sufficient Cashflow via Rental Income

By investing in real estate, you can generate consistent cash flow. A monthly rental income is a great way to build a good passive income. It offers great financial security to the investor. If you are someone who is about to retire, income from your rental properties can ensure that your retirement life is hassle-free. In Mumbai, the rental yield on residential properties can be between 2-4%, and that on commercial properties can be as high as 6-9%. If you want to invest in real estate only for the purpose of generating passive income, it would make sense to invest in a premium office space in Mumbai.

Safe & Secured Investment Option

Real estate is a relatively safer investment option than other assets like stock markets and crypto. Stocks and bitcoin are too volatile investment avenues in uncertain conditions like pandemics, inflation woes and recession. Real estate, on the other hand, has witnessed consistent growth in the last few decades. With the introduction of the Real Estate Regulatory Authority (RERA), the lower interest rates on home loans, and lower stamp duty in a few states, sales in the real estate sector have further increased because of these factors. Unlike stock markets and crypto, which are too vulnerable, the prices of real estate are steady and less susceptible to frequent fluctuations. This, of course, comes with the caveat that you should invest in a ready home, where there is no risk of delays, or invest in under-construction property only with a good developer with a solid track record and after the requisite due diligence.

Decent Return on Investment

The real estate returns in the majority of Indian cities surpass the inflation rate. Hence, it offers you real profits in the long run. Unlike stocks, gold, and crypto, the investment process in real estate is quite structured with RERA, well-documented and established court precedents, and established legal procedures like stamp duty and registration once done, the chances of theft or any fraud are minimal if you’re investing in a reputed builder’s project.

Tax Benefits

When you invest in real estate, you can also save your taxes. There are quite a few tax benefits of investing in real estate. If you have opted for a home loan, under section 80C, you can save up to INR 1.5 lakh on the principal amount. Similarly, as per section 24, you can also save up to 2 lakhs on the interest payable. In this way, you can make investing in real estate more affordable and also reduce a significant amount of taxable income.

Leverage

Leverage is one of the biggest benefits of investing in real estate. Leverage means borrowing capital to fund your real estate investments. It helps you increase your buying capacity. For instance, let’s say you buy a house costing 1 crore. You can pay as little as 10-15 lakhs down payment from your savings and take a housing loan to cover the rest of the cost. In this way, though you put only 10-15% of your money, you are the full owner of the property. Over the years, the property value will keep increasing and you’ll get a great ROI without putting your entire life savings into it.