MANOJa

The year 2011 was a bad one for equity as an asset class. Investors not only lost a part of their portfolio due to the decline in the market prices of shares but also their confidence in that asset class. The price erosion in equity was sharp and swift, and left many investors shaken enough to think twice before venturing into equity again.

For such investors, property is one of the safest and most usable avenue, and an investment with reasonable yield. Property has consistently out-performed traditional investment options such as bonds and with no correlation to the volatility in the stock markets. Today, property is the only physical asset that offers stability, simplicity and good returns.

Rent generates cash flows

A common approach to property as an investment option is a single-family home, apartment, office or retail space to be rented out. On renting out a property, you can benefit from not only an appreciation in capital value over time, but also from the rental cash flows. Such investments are to an extent inflation-protected , because as operating costs increase, the rental income increases too, compensating the additional expense outgo.

Plan in advance

A serious property investor has to plan thoroughly in advance. The funding should be in place before buying the property. You have to ensure that your financial planning is in place so that you do not have to liquidate your property for some emergencies due to lack of liquidity.

The first step in financing an investment in property is building the initial corpus. You can adopt the systematic investment planning (SIP) route and invest in a debt fund to build the corpus. If there is a sudden cash flow in the form of bonus, gift, sale of property or inheritance , it can be set aside in a fixed deposit or debt mutual fund till the property is finalised .

Loan to fund property

If property identified costs more than amount set aside, you can go for a home loan. Property is one of the few investments where loans are easily available for it. The home loan can be borrowed on the proposed property itself or can be borrowed on other owned properties.

Care must be taken to ensure the EMIs are funded for the tenure of the loan. If your income is large enough to pay the EMIs, you will have a good comfort zone. Or else, the rental income can be diverted towards the EMIs. It can also be a combination of both.

Create wealth

When a property is purchased and tenant identified the time and work spent on the property is considerably reduced. As time goes by the EMIs have to be paid. If well planned in advance, this process can go on smoothly for many years.

Time works magic on property that is purchased after a through analysis of its location and quality . The capital appreciation is huge. Some properties appreciate more than others and it's imperative that you identify such properties to create wealth. Look around and you can see many people who have generated their wealth through property.

Retirement corpus

You can look at property in two ways. If the loan is paid off, the rental income can be a pension plan. If the rental income in insufficient , you can sell the property to en-cash the capital gains. This can be a retirement corpus. The asset can be sold and the money invested in debt funds close to retirement to give steady returns.

Fundamentally, property is a safe investment because it's a tangible asset. Due to this physical aspect, you can never lose with property even in the worst case scenario.

Property offers additional immediate benefits in the form of short-term rents or personal use rather than just price appreciation, making it an attractive asset class.



Why investment in property is both lucrative and safe - The Economic Times

Krazy Yuppie

There is an old saying FOOLS MAKE HOUSES AND WISE PEOPLE LIVE IN

adit0083

ya right it is easy to count on some one elses gains as the those people have ride the wave of property appreciation but then it is good for now who knows when the correction takes place and for how long ...till 1 year back JP was the place to be ...but now most of the people are stuck barring the plots...i am not against JP nor an expert same for unitech as well...so luck has to be on your side to earn good in Real estate..noting is a rule

__________________
Life is good.