Are you planning to invest in real estate recently?
But confused whether is it the right option for you or not during this economic downturn?
Well, real estate is a great way to build your wealth in an economy like India.
Investing in financial assets like real estate is always an excellent decision. However, it requires savings of a small amount of money after using most of your income for daily expenses. Wherever you are in life, there will be a chance to generate wealth and financial independence by carefully investing your hard-earned money in real estate.
These plannings have shown to be beneficial in various financial situations, such as paying for your children's higher education or assuring a comfortable retirement.
So, plan your investments carefully. First, it is essential to research the assets you consider for long-term returns and map out your strategy appropriately. Then, you have to be certain of the followings:
- A proper investment plan for real estate
- A strong willpower
- Patience of mind
Sarayu Real Estate will teach you how to get the most out of real estate investing in this article. You will also get quality opinions from our years of experience in real estate investments. Finally, it will help you to grow wealth through a long-term real estate investment plan.
First, let's look at the possibilities and advantages of real estate investing.
Real estate investments have a lot of potentials.
Not only will the value of real estate holdings rise in the following years, but you may also generate a substantial amount of current income from them. As a result, you not only make a wise investment decision, but you also collect money throughout the year. The most outstanding example of a growth and income investment is real estate. Some of the advantages of real estate investing are listed below:
- Deferred taxation compounding of value: When you buy real estate, it grows in value over time. After five years, the value of your home will have significantly increased. The scope of capital gains tax implies when you sell an appreciated asset. If you acquire another residential property after selling your property, you may be eligible for a Capital Gains Tax exemption.
- Regular cash flow: Rented property will, of course, offer you a steady stream of cash. Buying real estate provides you with another reliable source of income. You may maximize your revenue by renting to numerous individuals through tie-ups with co-living providers.
- Reduced income tax bills: As real estate is a fixed asset or a long-term asset, there is a chance of depreciation. The term "depreciation" refers to the possibility of a decrease in value. You may always claim depreciation expenditure recovery by demonstrating them in your books.
Real estate investing warnings
Real estate investments, while their many advantages, also come with a few drawbacks. Let's look at some of the disadvantages of real estate investment and how to get past them:
- Operational profit challenges: You will have lower operating profits in the early years of owning and renting a property. There's also the possibility that your rental rates will drop over the period. As a result, if such a case comes, you must be financially prepared.
- Demand and supply: You will not be able to earn a constant rate of return every year. Real estate rental rates and property values are susceptible to market ups and downs, much like stocks. Although this may result in lower or negative returns, it also has the potential to provide us with a considerably higher rate of return than we anticipated. As a result, it is preferable to retain the property for a long time to profit from the benefits of an exponential rise in returns.
- Taxes: There is always the possibility of being taxed while completing a transaction. Sections 24 (home loan interest exclusion) and Section 80C (claim tax advantages on principal repayment) are examples of rules that can assist you in lowering your tax payments.
Purchasing real estate is an investment that, if carefully planned and executed with a clear and long-term vision, may provide you with a return unlike any other. However, especially in luxury real estate, having a team on your side to help you plan out your investment strategy and choose the finest properties among your investment possibilities is critical. That's where the Sarayu Real Estate team comes in.