Life can be changed by a wise investment. It could affect not only your life but also the lives of your children. The days of being financially independent by relying on a single source of income and conventional savings are long gone.
A wide range of assets, including equities, mutual funds, gold, cryptocurrencies, and much more, are included in investing portfolios today. Even though all of these assets are common, a typical India’s overall assets still consist largely of real estate. A study found that real estate accounted for 77% of the average Indian household’s total assets.
In India, real estate is an excellent investment choice because there is always a high demand for it. For any investor , getting a new property either commercial or residential is a dream come true. Realizing this ambition provides you with emotional fulfillment, but it also promises financial prosperity because a guide to investing in real estate in India has a good return on investment.
What is Investing in Real Estate?
When it comes to real estate investing, you have many choices. While you wait for the value of your single-family home to increase to a point where you can sell it for a sizable profit, you can buy it, rent it out, and collect your monthly rent checks. Alternatively, you may buy a tiny strip mall and charge businesses like mattress shops, pizza restaurants, and hair salons monthly rent.
You may invest in a larger apartment complex with numerous apartments and start receiving regular rent payments from your renters every month.
To determine which sort of real estate investing is ideal for you, you must conduct thorough study.
Why Invest in Real Estate?
Reasons that Real estate investing can add a lot of money to your bank account, but it also has potential risks and requires research. Here are a few of the most significant justifications for real estate investment. (Just keep in mind that neither appreciation nor cash flow are ensured. To improve your chances of making a profit, you must conduct research on houses, property deeds, apprasal reports ,locations, investment horizons etc . Here we are discussing 10 reasons to go for the opportunity :
1. India's Real Estate Market: A Reliable Investment
Investment in real estate has historically been a safe and low-risk option in India. It has consistently been the top option for investors with a lower risk tolerance when it comes to wealth building. Real estate is still a better investment than equity shares given the market’s turmoil and the impact of COVID.
Since 2020, there has been an influence, but it only persisted for a year or two before picking up and currently reaching levels that are practically pre-covid.
This sky’s the limit for investors in both residential and commercial properties in Delhi, with numerous MNCs and manufacturing firms establishing bases in India. Additionally, the rate of returns is constant and the most crucial element is the tax exemption it offers in the case of housing loans is the most crucial component, and the rate of returns is also steady.
Let’s look more closely at the elements that make real estate a trustworthy investment in India.
2. India Real Estate Investment: Buyer's Market
Although the COVID-19 pandemic was an unexpected disaster, it caused a correction in real estate values and gave prospective homeowners the information they needed to make an educated choice. In the past year, there has been an increase in demand for ready-to-move-in dwelling units across the metro areas due to extended work from home arrangements and the requirement for online education.
Whether they are first-time homebuyers or seasoned homeowners looking for a larger area, buyers prefer ready-to-move-in residences and are leery of making investments in under-construction ones.
The reviving housing market has also been helped by other factors like historically low house loan interest rates, stamp duty reductions by some States like Maharashtra, and alluring offers made by a number of developers on completed apartments.
The Reserve Bank of India’s Financial Stability Report (FSR) said that the number of unsold residential property units decreased to roughly 7 lakh units in March 2021 from 8.50 lakh units in the first quarter of 2020, indicating a further improvement in house sales.
The Anarock real estate research report supports the idea that the top seven metro areas’ sales momentum has surged by 93% annually.
3. Indian Real Estate Investment: Long-Term Growth
One of the main factors contributing to investors’ attraction to the real estate market is the fact that only a building’s value declines, whereas a land parcel’s value increases at a rate that is significantly faster.
If investors have extra cash, they would choose to purchase land instead of making paltry investments in fixed deposits. Additionally, rising real estate investment is fueling expectations of strong price growth.
When historical data is considered, it can be seen that from fiscal year 2005 to 2020, the real estate sector rose by 11.2 percent.
The volatility quotient of real estate investments is low compared to other market-linked investment options like equities and mutual funds. It continues to be among the most secure investment possibilities in India because it is a physical asset.
As when market prices rise, a property’s worth increases, making it easier for the owner to sell the house swiftly. Even if a property’s value remains unchanged for some time, with the right maintenance and management, you could generate a steady rental income.
Because of this, all investors should conduct research before deciding to make a purchase in a particular area.
4. India's Real Estate Market: A Source of Passive Income
Earning passive rental income from their property investments is a key goal for real estate owners. However, the rental revenue varies depending on the city, region, demand, and property type.
Residential properties often have a lower rental yield than commercial assets. Numerous chances exist in top metropolises like Mumbai, Delhi, Bangalore, Hyderabad, and Kolkata to generate rental income via farm leases, commercial leases, and student housing.
A property also carries an emotional importance in India and is seen as more than just a means of investment.
Aside from the chances for growth and passive income, one can always use a property as collateral with a bank to obtain a loan against anything like business loan, Education loan etc. without the actual hustle.
5. Low Interest Rates on Home Loans for Real Estate Investment in India
In India, house loan interest rates are currently at a 15-year low. The majority of banks and Housing Finance Companies (HFCs) provide home loans with annual interest rates under 7%. For qualifying clients, applicable tax savings on home loan repayment result in an effective interest rate that is less than 5% annually.
A person also receives an additional credit line at the same rate as or 1% higher than the house loan rate if they use an overdraft facility or increase their home loan amount. Along with the mortgage loan, the applicant can thus benefit from increased liquidity and more affordable financing for pressing financial needs.
One of the least expensive bank loans in India is a mortgage. Long-term property investing is unquestionably a good use of a large sum of cash when inflation is at or above 6%. It’s interesting that a home loan can be obtained for up to 75–85% of the value of the property.
6. Indian Real Estate Investment: Tax Savings Through Home Loan
A house buyer can avoid paying taxes on the principal and interest portion of their loan repayment. For combined house loan applications, each applicant may deduct the maximum amount allowed.
An applicant may deduct up to Rs 1.5 Lakh under Section 80 C on principal repayment and up to Rs 2 Lakh under Section 24 in accordance with the Income Tax (IT) Act.
According to the income tax slab rate, there is a tax savings. For affordable housing units costing up to Rs 50 lakhs, Section 80EE allows for an extra deduction of Rs 50,000 for interest payments totaling up to Rs 35 lakhs or less.
7. Real Estate Investment in India: RERA's Foresight
Home buyers’ interests are effectively safeguarded because of the Real Estate (Regulation and Development Act, or RERA). Investor confidence in the real estate market has also increased as a result of the RERA home warranty.
Builders are required by RERA to disclose project information in a public notice, and a project is deemed illegitimate if the developer does not have an RERA registration number. Periodically, the builders are obligated to provide updates on the status of the project. Thus, the RERA has improved the real estate industry’s accountability and openness.
8. Indian Real Estate Investment: Portfolio Diversification
When investing in real estate, diversification is an option. The relationship between real estate and the other major asset classes is shaky, at times even adverse. As a result, when real estate is integrated in a portfolio of different assets, volatility may be reduced and return on risk may be increased.
Real estate investment contributes to a person’s entire financial portfolio’s diversification. This ultimately aids in lowering the general risk connected with investing. But there are still certain dangers in making real estate investments. One must thoroughly understand the variables influencing the growth of investment in the real estate industry and carefully weigh all available investment possibilities.
9. High Return on Investment for Real Estate in India
There are two ways that a REIT can be profitable: First, REITs consistently distribute dividends to investors. Secondly, get money when you sell an investment if the REIT’s value increases.
It is frequently observed that the profits from real estate investments are significantly larger than the rate of market inflation. Consequently, we can give you a better return on your investment and a higher profit. Compared to other investment possibilities, real estate is thought to be more lucrative.
10. Real estate investment in India : Tax Advantages
You can reduce your tax liability when you invest in real estate. Real estate investing has a number of tax advantages. You can save up to INR 1.5 lakh on the principal amount of a house loan under section 80C. Similar to this, section 24 allows you to reduce the amount of interest that must be paid by up to 2 lakhs. This will lower your taxable income significantly while also find the right Property real estate investing more cheap.
In conclusion, there is no investing opportunity that is “one size fits all.” Before making a choice, the investor must assess their risk tolerance and investment horizon. Calculate the results and rely on expert guidance. To track pricing and make a wise investment choice we highly recommend switching to switch” Silverdome Realtors “ for satisfactory results.
1. Is investing in real estate still the most reliable option?
Real estate is still the most secure investment in India after the pandemic. This is mostly due to the regular rate of returns and the fact that housing loans qualify for a tax exemption.
2. Should I make a long-term investment in equities or real estate?
The most reliable long-term investment is thought to be real estate. Every positive or negative event has an impact on stocks which often changes. Only a small percentage of equities outperform the market over the long term, but real estate has continuously produced positive returns.
3. Are tier 2 cities a wise choice for real estate investment?
Many people have moved to tier 2 cities as a result of the pandemic as they have headed back to their homes. Due to this, real estate in tier 2 cities is more in demand, providing investors with a higher rate of return.
4. What benefits do real assets offer?
Real assets are an essential component of investment portfolios since they diversify the portfolio, can increase in value, and serve as an inflation hedge. Low correlation between real assets and traditional financial assets may reduce overall portfolio risk.
5. How can investing in real estate assist you?
Investments in real estate give the portfolio stability, a steady stream of income, and relatively low-risk leverage.