Some of us are familiar with the following advice on investing and spending: “Don’t spend on your liabilities rather buy assets that pay for your liabilities.”
To make it simple buying a fancy car or that heavily branded bag adds not to your assets but depreciating assets making them equivalent to liabilities.
Instead, one should think of buying an asset that regularly pays for itself and also appreciates in value itself.
That’s how real estate works!
Getting into further details of how real estate investments can be your gateway to increasing your funds manifold:
- Rental properties
The topmost way to invest in real estate in India is earning through rental properties. Buying rental houses in most popular localities serves as a regular income source and monthly returns are higher than most fixed income options available.
- House flipping
This option, though lucrative, needs the know-how of the real estate market, valuations, depreciation and right time for renovations. If you are someone who reads into the real estate market and understands it well, with a little tied up capital you can earn greater margins with flipping houses. In simpler words, staying in a house and maintaining it to the best condition and selling it for a margin to buy another which is likely to appreciate in the coming future. For eg: selling a house near a popular mall to move to the one which is closer to a new airport site that is expected to develop soon. The sale will cover your house moving and renovation costs and the margins will prove profitable. Bonus? The appreciation of the new property will enable you to flip again if you are cognizant of market opportunities.
- Real estate investment groups (REIGs)
If owning a property can prove cumbersome due to maintenance and managing of the same, this option serves as a solution. You can buy units from the best real estate investment groups just like buying mutual funds. The ownership is with the investors but maintenance will be the corporation’s responsibility. This way you can invest in multiple units from a single REIG without any time or effort required for managing, finding tenants or even renovating the property, but earning a fixed income from your investment.
- Real estate investment trusts (REIT)
A real estate investment trust is formed, when a trust uses capital from investors to purchase and operate income properties. Investing in such trusts is for people who are willing for an exposure in the portfolio rather than just a transaction of buying or selling.
Choosing the best REIT is dependent on the liquidity quotient. This option allows an investor to earn profits within ownership and managing a property. Similar to investing in a company’s stock, payouts are in the form of dividends and market valuation decides the profitability hence, dividend amount.
- Online real estate platforms
You must have come across start-ups calling for investors to pool in capital at crowdfunding platforms. Similarly, real estate online platforms allow you a crowdfunding opportunity in a real estate project. It is a good option for small investors as less capital is required than buying a property. Additionally, it allows for geographical diversification as you can invest in single or multiple projects spread across the country.Real estate market can seem daunting to a newbie investor. Bit with proper guidance and goal-driven strategy, it can prove to be a gold mine.