Factors That Make Real Estate a Good Investment Option

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  • By Admin
  • Dec 19, 2018

When people plan of investing any money in the economy, it is generally headed by goals of earning profits out of it. And for people to realize this wish, it is important that they carefully select an investment avenue that has a good chance of gradually increasing in value.

Having suffered an ill fate some years back, the real estate sector has been on the path towards a constant upward growth for a good time now. The continuous migration of people from different regions in search of better careers prospects keeps giving a major boost to the real estate market in metro cities like Chennai, making them best places to invest in real estate. This in turn also gives impetus to real estate developers for offering more and more projects that cover different categories, all the way from affordable to luxury property options.

That real estate in general makes for a stable and profitable investment however, is not a notion that has freshly come up; it is an age old fact. There are various reasons as to why investors are more inclined towards making investments in properties as compared to anywhere else. Mentioned below are a few of the reasons why real estate investment is a good choice:

Better Control Over the Investment

This is the case with many investment options, particularly bonds or stocks; investors really don’t have a lot of control on how the returns on investment would turn out to be. However, when you invest in real estate, you tend to gain a little more flexibility and control than any of the above mentioned avenues.

In real estate, if you wish to increase your ROI, you can go for options like refurbishing older houses and selling them off for a higher value. If renovation is not what you intend to do, you can simply put the property out on rent and continue earning a considerable sum out of it for a good long time.

Cash Flow

Another big distinction between bonds or stocks and properties is that the prior get your money tied up until you decide to sell them off. But, with a house, you can keep receiving a constant cash flow by putting it up for rent.

Renting can not only help you pay off your home loan, but also deal with the extra expenses that you might have incurred in the process of ownership. If you do not have a debt or any additional expenses related to repair and maintenance, you can reinvest the money in real estate or wherever you like.

Properties are Tangible in Nature

Contrary to stocks or bonds, real estate properties do not simply exist on paper. They are physical assets that hold more value. To better explain this, even if the value of your property goes down on paper, it hasn’t actually been affected, as you can still generate capital out of it.

Hence, unlike the case with other investment options, with a tangible asset like a house, you never completely lose the full value.

Value Generally Increases Over Time

As has been generally observed, the longer you hold on to a property, the more money you end up making. Be it with regards to investment in Chennai or in any other metro city, the real estate market always seems to recover from a period of depreciation in property values. Investors, who endure during these periods, not only find prices returning to normal, but appreciation in property values coming back on track as well.

Despite the major reforms experienced in the past years, the real estate sector is not one to be lagging behind and investors continue to receive good returns.

Tax Benefits

Even primary homeowners can claim a tax deduction under the Article 80 C, 80 EE, and 24 B of the Income Tax Act, on the interest payable on home loans. Tax deduction are available to individuals under various criteria, including first time home ownership, purchase of a second property, payment of long term capital gains, and of course, repayment of a home loan.

Although no tax benefits are yet available for real estate investments made via real estate investment trusts or REITs, individuals yet have ample opportunities for saving taxes.

The thing about investing in real estate is that with the improvement in the market scenarios, the value of the property improves as well, which further helps build your equity. On the other hand, if you were to invest in stocks, your risks would hardly change and you wouldn’t even be able to control the factors that impact your investment negatively.

But, if you were to, let’s assume, invest in properties in Chennai, it would enable you to leverage your investment to capitalize across various revenue streams and also enjoy the appreciation of capital alongside.

Given all of the above, the answer to whether or not investing in real estate would be good seems quite obvious.

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