A good investment is one which offers steady returns with minimal risk and factors in the rate of inflation of the economy. In today’s times of ever-rising expenses and a highly skewed income-expense ratio, the need for a secondary income cannot be understated. The best way of creating another source of income and generating wealth is by investing wisely.
There are many investment tools available today for people to invest according to their needs. Real estate investment still features in the top list of investments and is presumed to have relatively lower risks and offer good earning potential in the long term. It is a huge investment regardless of the place you live in, but with financial institutions stepping up their game of providing affordable home loans, it is within the reach of many people.
When you invest in stocks or mutual funds or fixed deposits, you make money when the stock appreciates or on the maturity of the fixed deposit at a predefined rate of interest. On the other hand, investing in real estate opens more doors of income than one. A few of them are:
Rental Income – This is the easiest way to make money on your real estate investments. Rental income can vary according to the location of the property and the amenities that are available around. If you are investing with the perspective of rental income, then you must do a bit of market research to understand the rents paid by tenants in various areas and their ratio to the property prices. Real estate in India is a market full of varying prices and research can help you bag a good deal.
Buying Properties at a Lower Price and Selling Them at Market Value – Property owners, in times of need, try to sell their properties at the earliest. Such deals are ideal for negotiations and can help you capitalize on the urgency of the sale by offering to buy at a relatively lower price. Home buyers who are under a loan but unable to pay the instalments for any reason are the other set of sellers who can be approached for a good deal.
Profits made by Selling at Higher Price – The traditional method of making money in real estate in India has been to buy a property and sell it after a minimum of 10 years. Property prices are known to rise over a long period of time and they usually offset the inflation and the currency devaluation aspects. The luxury homes in India are always in demand with increasing incomes and a constant urge to upgrade the lifestyle. These can be a good investment option too.
Income Made from Leasing to Businesses – If you have a property that can be of commercial interest to a company, then you can choose to lease it to them. Usually, businesses offer good rents and longer contracts, saving you the hassle of finding new tenants every couple of years or so.
One of the most important benefit of investing in real estate in India is that your income will primarily depend on what you do with it. Before buying a property you must have a thorough understanding of the ways in which you would want to utilise it to generate income. With that in place, the next step is to decide the location of the house, the type of property, whether you want to buy new or resale property and other similar aspects.
Like investment in shares or mutual funds, soliciting the advice of a professional can certainly help in taking the apt decision. In a nutshell, real estate offers a plethora of opportunities for investors willing to be active participants in their investments.