Why Should You Invest in Real Estate
Have you ever wondered if the House you staying presently or the assets you own today, which was either bought by your father, grand father or your self years back, what is the value of the same today and you will get the answer to the above question to a good extent.
Real Estate - Tangible Asset
Real Estate - Tangible Asset
Real Estate is a tangible asset class and unlike other investments like stocks, bonds and other mutual funds etc. you can feel and use it. Most of the financial products available in the market are bound by a certain amount of projected or fixed returns and they may be even 100% safe. Stock markets we all know there is volatility and you can be up or down and there is no guarantee of returns or safety of your principle neck down to zero.
On the other hand, if the real estate market falls, it will fall at max not more than 20-30% in any grave eventuality and too the factors pulling it down should be grave like a Government Collapse, Bankruptcy of the City Council or poor infrastructure and a socio economic collapse.
In today’s date and time, there are so many buyers waiting on the fence that the moment they hear of a 20-30% discount, they want to sign up immediately.
So no worries on that end at least in the Indian Economy and especially Mumbai as a city.
Capital Gains + Lease Rent Returns
Capital Gains + Lease Rent Returns
An investment in Real Estate should always be considered for more than 3 years and better to sell the property either before possession but after 3 years so that you have the right in property intact and save on Capital Gains tax and reinvest the proceeds into the next property. If one is able to do this and revolve the funds around in a strategic way then all is good, in a matter of 7 years you could at least triple your base investment that too with a SIP (Staggered Investment Plan), this is a term we use, when you are making the payments over a period of time.
Sometimes, Capital Gains + Lease Rent Returns can give you a far more yield on your Invested Capital.
Portfolio Diversification
Portfolio Diversification
Each one of us understands, that we cannot put all eggs in one basket. So advisable would be to be liquid as to what you require say in the next 1 year as your expenses, travelling, car buying, home renovation and some more and balance you stack it away in Real Estate, Fixed Income Bonds, Fixed Deposits etc. This way you are not stressed.
Inflation Hedging
Inflation Hedging
The inflation hedging capability of real estate, stems from the positive relationship between GDP growth and demand for real estate. As economies expand, the demand for real estate drives rents higher and this, in turn, translates into higher capital values. Therefore, real estate tends to maintain the purchasing power of capital, by passing some of the inflationary pressure on to tenants and by incorporating some of the inflationary pressure, in the form of capital appreciation.
Exit Issues
Exit Issues
Real Estate as a category to sell when you really want to, can be a little tiring. It all depends on the cycle of Demand and Supply, Time of the Year, Bullish or Bearish Stock Markets, Liquidity Crunch position or New Developments in the area taking being preferred.
There could be factors, which could be beyond your imagination and hence it also advisable to take max bank loan permissible on the property and use a Smart Home, HSBC Mumbai offers an exciting proposition for people who want to buy property and yet stay liquid.
For further information, please feel free to mail or call us.