Feb 06, 2021 | 5 minutes read | 0 Likes
Investing for long term in the real estate has vast advantages. It is not false to await high returns from real estate property in long term. As in the other investments, even the real estate has its individual control points. The investment philosophy that applies to real estate is smooth.
How to protect that the real estate property will render good revenues?
Identifying good properties is a major in real estate investment. If invested correctly, real estate investment can administer maximum returns with minimum risk. But on snap side, bad real estate can really chew away money. It is crucial for the investor to be conscious of both profit and loss of real estate investment. People ordinaily put their money in real estate to buy homes for their self occupation. In this case the risks are low as selling-burden for profit booking is minimum. But for investors who redeem real estate properties to make surplus, needs to take care. For such investors it is mainly to know the pros and cons of investing in real estate sector.
1. Allows Change of Asset
Real estate has approximately no blunt correlation with other suitable paper based capital like equity, debt etc. In fact, it has a negative correlation with assets like stocks, gold etc. This means, the prime profit that real estate provides is diversification or change of asset. Expansion in value of real estate portfolio carry little relationship with other asset classes. It is common to catch that, when stock market is acting bad then real estate will behave well. In a situation where an economic explode is at its end, real estate property would still allow good returns.
2. Spontaneous Dual Income
Assets Like stocks, real estate also provides opportunity of dual income. Stocks provides short term income in mode of dividend. Real estate provides lease income in short term. But the predictability of lease income is far more settled than dividend income. In long term, both stocks and real estate provides capital appreciation. Stock can provide faster gratitude. Real estate provides slower but steadier capital appreciation in long term.
3. Great Expansion Hedge
A consolidation of lease income and value appreciation certainly beats inflation. There is not other investment which can beat inflation as consistently as real estate property. Actually, it is not exhibit to consider real estate as only expansion hedge. If invested properly, returns from real estate property deceives expansion by miles.
4. Saves Income Tax
If investment is real estate is made accounting home loan, then tax benefits can be defend. For first house which is self occupied, following tax benefits are suitable: Deduction U/S 80C (principal component-Max 1.5 lakhs). Interest paid against home loan is qualified for tax deduction U/S 24 (Max 2.0 Lakhs). For second house, benefit U/S 80C is not available. But entire interest component is eligible for tax deduction. If interest component is 3.0 lakhs, then complete 3.0 lakhs is eligible for deduction u/s 24. But the second property will be considered as “assume rented out”.
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