Investor realty
Real estate market has witnessed spectacular spikes in the last couple of years. The industry that was languishing for almost two decades has caught the fancy of investors because of the sudden surge in prices. For ages, real estate has been important to mankind. Many wars were fought just to increase the land holdings and kingdoms. As economies started moving away from agriculture, real estate was relegated to background. This did not deter it from showing its rosy hues every 20 odd years or so. One thing nice about the industry is that boom in real estate gives fillip to other ancillary industries, like glass and paints, flooring material, draperies, furniture, etc., which is good for any country?s economy.
Recent changes in financial world and tax concessions have added new dimensions to investment in real estate. Now people can buy real estate with loans raised by mortgaging the property being acquired. This has sort of unleashed the pent up desire to own such properties. Perhaps real estate prices had gone well beyond the common man. Therefore, few could come forward to purchase any property. Logically, this would have driven the prices down. Instead, the prices stagnated or moved up in a narrow range. Recent fall in interests, and cheaper home loans have created an unprecedented demand leading to the boom in real estate prices. One more factor is that in good old days, people bought homes to live in. So they were satisfied with on home. Now, people buy more than one home so that the second home can generate regular rental income, or become a place to get away from daily hustle bustle of city lives. Affordability has also improved with industrialization. More people are now employed and pay scales are much better than what they were. Consequently, people can afford to own those palatial buildings that were restricted only to the high class families earlier. Even those investors, who cannot afford to buy any home or other real estate property because of paucity of funds, are now in a position to take advantage of the boom in real estate prices through mutual funds.
Investments in real estate are less risky. If an investor does a proper due diligence, there is no way that he or she can ever lose with real estate. For an inexperienced investor, temporary setbacks may be there. But by holding the property for a long period of time, the investor can more than make up the loss. The same may not hold true for investments in stocks. In fact, remaining invested in a stock for equally long period is extremely risky. Unlike stock markets, one need not keep abreast with the latest prices. Similarly, assets made of gold, silver, copper, and bronze are likely to lure thieves. But real estate is not such an obvious possession. It is also not so easy to steal it as conveyance involves other parties, including government officials. Artifacts and other collections too can be stolen. What is worse is that they can also be damaged. Once an artwork is damaged, it loses its value overnight. So extreme caution is required with investments in art. One also has to be very knowledgeable about the collections, so that they continue to have a value. Security is another regular expense that people, who invest in precious metals, art objects, and collections, incur. Bonds, debentures, fixed deposits, and other financial instruments, exist in market. But they have a far lower rate of return because of low risk associated with them. Though real estate investments are said to be less liquid when compared to bonds and other assets, it is possible to unlock part of the value through loans. Interest paid on some real estate mortgage loans, especially home loans, is deductible under income tax. In some countries, principal repaid is also allowed as deduction. Unlike bonds and other less risky assets, rentals from real estate investments increase periodically, thereby providing some cover for inflation.
Before searching for a real estate investment option, the investor must identify the sources of funds available for such investment. Thereafter, he or she can collect information from Internet, or other real estate brokers to identify which property will be most suitable investment option. If quantum of rent takes precedence, like it does in case of elderly, then the investor may opt to buy an apartment or a commercial unit within the city. If rentals are not so important, then going outside the city may sound more appropriate in view of capital appreciation potential. Sometimes, tax deductions can make investment in homes more beneficial than investment in some commercial property. At other times, government may pass some orders whereby prices of properties may stagnate. All such factors must be considered before investing in real estate because it is a long-term investment, and also because withdrawal of any part of the amount may take time.
Other Articles
