Could investing in Real Estate make you the next millionaire?

15 Jul 2022  Read 612 Views

"Ninety percent of all millionaires become so through owning real estate." -Andrew Carnegie. 

Which is the best way to diversify the investment portfolio? How does one get an additional income source that will keep their pockets filled? The answer lies in real estate investments. 

Investing in real estate is an excellent option to generate income. Yet, many newbies find it hard to enter the investment market. But there is no need to worry. The real estate market in India is booming, and one can get started on their real estate investment journey in plenty of ways.
Excited already? Read on to know more!

Why should you choose to invest in real estate? 

Source: Scalar

The real estate sector of India will hit USD 1 trillion by 2023, says the Ministry of Housing and Urban Affairs (MoHUA). 

The main function of real estate investments is to grow one's investment portfolio. Studies reveal that property investment will keep on increasing in the future years. The capital appreciation and rental yield keep increasing, making it a good investment option. The unparalleled returns generated in the real estate sector attract many potential investors. The growth and expansion of cities are the prime reasons that make investment property an effective investment option.

Here is why investing in real estate is a very good option. 

High appreciation value 

Real estate investment grows with time. This, in turn, leads to an increase in the rent, which improves the cash flow for the investor. Even if the market goes down, it will rise and become normal once everything gets sorted down. 

Improved cash flow 

Once the operating cost and mortgage payments are covered, the investors can start counting the net income they are generating from their investment. One can generate a good amount of passive income from the investment in addition to long-term financial security. 

Leverage 

One of the best things about real estate investments is that one can invest without making the full payment. Investors can make a small portion as a down payment and borrow the rest of the money. This offers the flexibility to the investor to make investments along with saving money for emergencies. 

The real estate sector is considered to be the second highest sector that offers employment to the people in India. It is expected to contribute 13% to India's GDP by 2030. “Don’t wait to buy real estate. Buy real estate and wait.” – Will Rogers.

What are the ways to invest in real estate? 

Let’s make this simpler by zeroing in on the most lucrative options. 

Source: Forbes
Buy REITs

Investors who don't want to invest in physical real estate can buy REITs (real estate investment trusts). These are trusts usually owned by hotel chains and real estate giants. Investors can even reinvest the dividends to grow their investment portfolio. 

Buy rental properties 

Buying and renting out an investment property can go a long way in improving one's income. This type of real estate investment offers high ROI in terms of rent. It is like a source of regular income that investors can appreciate. In addition, it can maximize capital through leverage and provide tax-deductible benefits. Thus, rental properties help the investor get the maximum benefit from their investment. 

Choose flipping investment properties 

Flipping investment properties is one of the most popular investment methods that offer good returns to the investor. The investor invests in a property that needs a minor renovation. They can renovate it inexpensively and resell it at a higher price than the sum of buying and renovation costs. This way, they can generate a good amount by just flipping real estate properties. 

Rent out a room

Another way to invest in real estate is renting out a room in one's own home. This allows people not only to stay in their own homes but also ensures that they can benefit from the price appreciation. Studies reveal that this type of renting is more common among older people. However, many younger people stay with their roommates to make mortgage payments attainable. 

Online real estate platforms 

Investors who wish to invest in large-scale residential or commercial properties can choose online real estate platforms. The investment that is paid in such platforms is via real estate crowdfunding. At its core, the online platforms work to connect potential investors with real estate developers. When one chooses online real estate investing platforms, they get a chance to invest in a single project or multiple projects as per their needs and preferences. 

Even though the above methods of investing in real estate are reliable and trustworthy, one should choose the option that works best for them. Thorough research is required to ensure one invests in the right direction. 

What to consider while investing in real estate?

Investing in real estate boils down to investing in a property. Here are a few things one needs to consider:

Estimate affordability

One shouldn’t overlook affordability while purchasing a property. Before looking for the properties they wish to invest in, they should analyze their budget according to income and savings. Besides the actual cost of the property, one needs to pay extra attention to other costs like stamp duty and registration charges, GST, advance maintenance charges, parking charges etc. 

Select the property 

Next important thing to consider while investing is the selection of the property. For this case, one should take a look at the location of the property, the amenities, and the size. Once it's done, one needs to ensure that the chosen property aligns with budget criteria. 

Apply for a home loan 

If there are less finances than needed to buy the chosen property, one can apply for a home loan. Always check the reputation of the builder to ensure the legality of the property before finalizing the purchase. Document verification is also vital as it helps one to avoid surprises. This is an important point to check you don't want to fall into a debt trap for a false deal. 

The Bottom Line 

“If you’re not going to put money in real estate, where else?” – Tamir Sapir
Investing in real estate is, undoubtedly, one of the best ways to diversify the investment portfolio and generate additional income. As per our research, real estate demand in India will rise by 15-18 million sq. ft by 2025. There are many ways and opportunities to invest to maximize the benefits. However, not all ways can suit every type of investor. That is why each investor should look for the right type of investing in a real estate option. 

About the Author: Rishika Mukherjee | 250 Post(s)

Mukherjee is an avid reader and loves to write as much as read. She is the youngest of all but handles chores like a 50-year-old woman. She takes a lot on her plate and somehow, eerily manages to get the job done. As Hazel Grace stated, she could read a good author's grocery list, and so would Miss Mukherjee. 

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