Essential features which makes real estate investment profitable

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Investing in real estate confers long term benefits apart from its potential for producing heavy profits. Though there are many benefits but I am mentioning only main ones:

1. One may remodel(enhance and increase the value of)real estate:

In case of a person holding stock, he retains it with him and then sells it for a profit. For a stock to be profitable, there are certain factors on which stock depends like management of a company, corporate success etc. All these factors are out of a person’s control who is holding stock.

Whereas profit of a real estate investment is directly under your control. Although some of the changes that occur in demographic, economic, social etc may not be under your control but there are many other aspects which can be easily tamed. And those tamed changes boost profits in investment.

2. Real estate profitable even during recession ( if done right):

It has been stated by many real estate experts that landed form of property investment is most suitable and secure form of alternative channel of investment. It has on several occasions been used to affect a bail out, from financial setbacks such as those people who have witnessed economic downturn prevailing in Nigeria during present times. A former American president quoted that:

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“Real estate can’t be lost, nor carried away, managed with reasonable care, it’s about the safest investment in the world- Franklin D Roosevelt”

3. Real estate investments immune to inflation:

It’s a universal fact that inflation adversely affects the conventional forms of investment. But it cannot have the same effect in real estate investments that it exercises on conventional ones. In other words, real estate investments are immune to inflation. This is because the value of real estate rises in connection with inflationary pressures. The basic characteristic of real estate allows the owners to adjust the rate in order to match with inflation. For example monthly rents can be increases during inflation.

4. Real estate universally acceptable as collateral:

It is a widely known and accepted fact that real estate, be it buildings or land with proper title is most recognized form of collateral in India and various other parts of world. It protects the interest of both borrower and bank, and funds are generally given after the due verification process followed by the bank.

5. Real estate investing enables use of other people’s money:

In simple terms, a person can do investment in real estate even if he doesn’t have money of his own. He just needs to know how. Real estate being a physical property or hard estate appeals to financers to invest. This is the reason real estate properties are bought with loan or debts. So real estate investments can be done using cash or mortgage financing. In case of mortgage financing payment can be structured to allow payment of low initial sums, which can be paid by you or any other person on your behalf.

Those payments will be given for a landed property whose value will increase throughout the process of payment and even after the completion of the payment process. Hence this investment is safe and secure.

6. Stability

Real estate investments are stable as compared to conventional investments, where market is volatile. This means property is less prone to short term speculators than paper asset classes. The returns are periodic.

7. Long term investment

Real estate investment not only benefits you but also your future generation. You can make a property and pass it on to your kids easily, obviously depending on the legal structure in which you own the property. Sure you can do this with your shareholding as well but how many top companies from 30 years ago are still at the top of share market? Not many, but a well positioned property will grow in all respects.

Above all there are various tax benefits which a person owning a real estate gets depending on the laws of country in which he owns the property.