How to Create Wealth Through Real Estate?

In the last five decades, may it be due to job or study purposes, many people have shifted to rented properties. Also, many start-ups have cropped up, necessitating the need for commercial spaces at strategic points within top-tier cities. Therefore, plunging into the pool of real estate investments is a great idea now more than ever.

Here, you will learn about how to create wealth through real estate inside out as we discuss the associated investment opportunities. Also, we will include several passive ways besides the most common methods of real estate investments.

Before you choose real estate as an option for wealth creation, it is crucial to understand the various investment avenues associated with it. Here, we have discussed some ways to gain wealth through real estate in India:

1. Rental Properties

In India, renting out your property and earning monthly revenue from it has been a common practice for a long time. First, you invest in an apartment or house, choosing a locality that is likely to attract a specific group of tenants. 

However, some potential disadvantages may appear if you rent your property. The biggest cause of headaches can be the tenants themselves if they live carelessly and cause damage to the property. Another big issue can arise if they do not stick to timely payments.

2. Real Estate Investment Groups

Entering the realm of real estate investing via REIGs can be ideal if you need more time to maintain the property. Investments made through REIGs are similar to mutual fund contributions, where you invest in a company that manages several apartment blocks after purchasing them. Later on, these companies offer these possessions to investors who buy them, providing a profit margin to the company. 

If you contact a real estate investment group and seal contracts through them, you can simultaneously enjoy the yields generated from more than one living space. Also, you never need to worry about their maintenance costs.

3. Online Real Estate Platforms

This is a viable option, especially for beginner investors who wish to start with a small amount. When they choose these platforms for generating rental income, they become a crowdfunding source. You can trust these online applications as everything executed on these sites is strictly monitored by RERA. 

Additionally, investing via online real estate platforms provides scope for geographical diversification. This aspect contributes to real estate wealth creation if you want to capitalise on varying real estate markets.

4. House Flipping

This method proves to be fruitful only for veteran real estate investors. These people have proper knowledge regarding estate valuation, renovation costs, marketing strategies, etc. Apart from these foreseeing abilities, they also have adequate capital to invest in an estate single-handedly. In house flipping, you hold possession of a house or apartment for a short time and then sell it at a hiked rate. Though the idea is simple, perfect execution requires adequate market knowledge that can only be attained with experience.

5. Real Estate Investment Trusts

We suggest REITs as an investment option only for a few people. If you are more into portfolio diversification than considering real estate as a primary investment avenue, then you should research more about REITs. These investments are highly liquid and offer dividend payouts, unlike stocks of major companies.

Developing an idea about the advantages will help you realise why this industry will be a preferable investment option for the upcoming decades. So here we have listed them for a quick reference:

• Real Estate Appreciates in Value: Owing to limited residential space and growing demand for accommodation in urban settings, real estate prices are bound to go up gradually. Moreover, rental yields appreciate annually. Therefore it is less likely that anyone can go wrong with real estate investments, especially when they have purchased a property in a highly prospective region.
• It Guarantees a Decent ROI: Across the strategic hubs, most of the real estate yearly yields exceed the inflation rate. That’s why you earn a long-term profit, and your possessions remain protected under the regulations of RERA. In addition, it follows a regularised procedure for investing, unlike in the stock market, gold or crypto. Eventually, the RERA ensures fraud does not occur when purchasing holdings from any registered builder's project.
• You Get Tax Benefits: When you apply for a home loan from any bank or NBFC, you can save up to ₹1.5 Lakhs per annum on the principal. This regulation is as per Section 80C of the IT Act. Moreover, you may even apply for about ₹2 Lakhs tax exemption on the payable interest amount under Section 24. This is how you can strategically reduce your taxable income and simultaneously gain profit from the real estate market segment.

Though the real estate market may seem complex for new investors, One can progressively simplify it under ideal guidance. If you are seriously considering how to create wealth through real estate, then the options mentioned above can serve as an ideal starting point. We recommend you evaluate the liquidity factor and risk involved in various real estate investment types before proceeding to a specific avenue.