Types of Real Estate Investments
Read Time: 4 mins
Investing your hard earned money is no easy task. You research the best you can, you take advice from friends and experts in the field and in the end make a decision that works best for you. One of the most common advice given often is to invest in Real estate. Real estate investment is considered one of the safest in the industry. While it is the safest, it is not the easiest to navigate.
You can choose multiple ways to invest in real estate – each investment has its own pros and cons. In this article, let us look at the different types of investments and their traits. Some of the common types of investments we have seen in real estate are:
- Investing in homes – apartments or villas
- Commercial ventures
- Land investment
- Real estate investment trusts (REIT)
Investing in homes – apartments or villas:
If you are a novice when it comes to real estate investment this is most often the first investment we encourage you to make. Buying a home is a dream for many and people use their life savings to make this investment. This investment is very emotional and practical at the same time.
There are a multitude of options available for buyers out there but make sure to do your research and opt for a well reputed, long standing builder to trust your home with. Look for the right track record, feedback from existing customers, amenities & specifications provided, completion time, affordability and resale value amongst other things. Don’t be swayed by the marketing content but go an extra step to ensure you are making the right choice
Buying an apartment or villa purely as an investment opportunity is a good choice too. Given the location and proximity of the house to industry hubs there is always a requirement of housing for the out of state employees which is rising as we speak. For this investment you need to focus on picking the right location, gated communities with amenities and good specifications.This will ensure that the rent will be high and you don’t have to spend much of your time looking for renters.
Commercial ventures are a good choice for investment if you have a little more time on your hands. The effort and investment required from your end is slightly higher in this area. Searching for the right location, finding the right construction partner, and finding the vendor will take considerable effort from your end. While the return is high in this option, the maintenance required is important too.
Buying land is a strong investment choice. You will have multiple options to exit as you can partner with construction companies for a commercial or residential project. You can also choose to flip the land for profit over time. You can’t go wrong with either of the options given you do your research. This is a viable option if you can invest a huge amount.
Land investment comes with a lot of legal variables as well. You need to make sure the land is registered the right way, all the paperwork is in order and there are no litigations surrounding the land – if there are any, you might end up going around the courts for several years to claim your ownership. Be alert and do your background work before investing in a land.
If you are looking to build a house on a piece of land, one good way of purchasing a plot of land is to look for GHMC or HMDA approved layouts which are being sold by reputed construction companies. This way you can ensure that the permissions and basic amenities are taken care of and you can focus on building your dream home. Contact us to know the availability of GHMC or HMDA approved plots.
Real Estate Investment Trusts:
REIT’s are relatively new entrants in the Indian real estate industry. REITs in simple terms are similar to mutual funds in real estate. They are managed by a professional portfolio manager and the underlying asset in this case is a real estate holding or loans taken for real estate. One of the major hurdles for investing in real estate is the high ticket price, REIT’s aim to resolve this issue as they require a relatively smaller investment . As of writing this article, there are only three REIT’s that we can invest in India. REIT’s generate dividends for customers as 90% of the income generated has to be distributed in dividends as mandated by law in India. If you want to purchase an REIT you must have a DEMAT account in India and you can trade them in the stock market.
Whichever might be the source of real estate investment, it is crucial to remember that little research can go a long way in protecting your investments. Real estate investments like any other investments are best when they are long term investments.