Basically, real estate investing is buying, managing, renting or selling of the real estate to earn profits. It also involves enhancement of the realty property and plays a significant role in real estate development process.
The irresistible decision
It must be surely your overwhelming decision to start real estate investing for generating profits. It can be perceived as easiest investment option but it is surely not everyone’s cup of tea. For instance, you purchase an apartment for Rs.10 Lakhs. After period of ten years, you sell the same for Rs. 15 - 25 Lakhs. In this way, you earn profit percentage of about 50%~150%. You may also rent the house to college students for a monthly rent of Rs. 3000. You earn Rs.36,000 annually without much effort. So apart from the value appreciation of the property, you are getting rent too.
We will understand in detail the pros and cons of real estate investing.
Real Estate Investment – The Greener Side
It is a safe investment type as many investors do not dominate the market. The value of your property is increasing on consistent basis. If you choose your property carefully, you will surely gain in the long run. You may also rent your property to gain monthly returns. You can mitigate several risks of fire or damage by insuring your property. You need not have technical knowledge about real estate market. An intuitive mind is enough for selecting the right property. Modernization is taking place even in rural areas. Hence, there is constant demand for houses or office property.
Real Estate Investment – The Not-so-Greener Side
If you want immediate cash, you cannot sell your property quickly. The long and cumbersome procedure must be taken into consideration. Apart from the initial investment costs, hidden costs are also involved like repairs, maintenance charges, land tax, water charges, and insurance and so on. These expenses are recurring in nature. If you have acquired the property on mortgage basis, then you need to cover the required repayments. The most problematic situation arises due to the bad tenants. It depends majorly on your luck to get good tenants who pay rent on time, do not cause damage to the property or leave the property when requested. In case of bad tenants, the situation becomes frustrating enough for the owner.
What must be in the right property?
A few points must be noted before purchasing and selecting the investing property. It must be situated at the right place. The amenities must be easily accessible. Location of schools, colleges, medical stores, hospitals, grocery stores or departmental stores must be easily accessible from your property. The property must have constant demand by the tenants and the prospective home buyers. The investor must not select the property out of emotions but must carry a logical research for the same.
Thus, in real estate investing, careful selection of the property is of utter importance. The property also needs to be managed efficiently. You may do it yourself or appoint an estate manager for the same. He takes care of finding tenants or home buyers.
