Investing in real estate confers long-term benefits apart from its potential for producing heavy profits. Though there are many benefits, I am mentioning only the main ones:
1. One may remodel(enhance and increase the value of)real estate:
In 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 over who is holding stock.
Whereas the profit of a real estate investment is directly under your control. Although some of the changes in demographic, economic, social, etc., may not be under your control, many other aspects can be easily tamed. And those tamed changes boost profits in investment.
2. Real estate profitable even during a recession ( if done right):
Many real estate experts have stated that the landed form of property investment is the most suitable and secure form of the alternative channel of investment. It has on several occasions been used to effect a bailout from financial setbacks, such as those 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 on real estate investments that it exercises on conventional ones. 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 to match with inflation. For example, monthly rents can be increases during inflation. In other words, real estate investments are immune to 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 the proper title, is the most recognized form of collateral in India and various other parts of the world. It protects the interest of both borrower and bank, and funds are generally given after the due verification process followed by the bank.
In simple terms, a person can invest in real estate even if he doesn’t have his own money. He needs to know-how. Real estate is a physical property or hard estate that appeals to financers to invest. This is the reason real estate properties are bought with loans or debts. So real estate investments can be made using cash or mortgage financing. In the case of a mortgage, financing payment can be structured to allow payment of low initial sums, which you or any other person can pay on your behalf.
Real estate investments are stable as compared to conventional investments, where the market is volatile. This means the property is less prone to short-term speculators than paper asset classes. The returns are periodic.
7. Long term investment
Real estate investment benefits not only 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 the share market? Not many, but a well-positioned property will grow in all respects.
Above all, there are various tax benefits that a person owning a real estate gets depending on the country’s laws in which he owns the property.