The supply of real estate, however, cannot be infinite with land being a limited resource which in result in higher property prices from a long-term perspective
Investing in real estate involves a lot of intrinsic thinking. In addition to being a huge financial decision, it's also an emotional decision as both the property and the finances invested behind it have a story to tell. The beauty of this segment is that in addition to providing you with your own space, it can also act as a separate income-generating asset. While there are many financial asset classes that can grow and generate income and profit for you, nothing beats the realty segment. Not investing in this asset can also be recorded as a financial mistake as the returns the segment promises is unmatched. Mentioned below are reasons on how you can make your residential property give you the extra edge by means of profit.
Property Appreciation: This is the most prevalent source of residential real estate investment. Any property appreciates to a significant level and then sees a gradual upward growth as and when the location develops. Initially, a project sees a marginal increase on its completion than what it was when announced and five to 10 years down the line, the appreciation is almost five to six times, depending on how the face of the area has changed. There are many residential areas in Mumbai that has proven this. With the infrastructure boom in the city like the metro connectivity, excellent road connectivity, the many CBDs, the transit railway station in addition to the prime areas, the periphery areas where people wouldn't invest thinking it to be very far has seen a change in perception. Today, owing to the infrastructure developments, there is nothing defined as far or near in Mumbai and investing anywhere in the city promises you of good returns in the form of realty appreciation. Newer residential locations are opening up and the city is growing in all directions, giving people an opportunity to invest in any location that they choose to.
Rentals: This is another popular way that ensures that your residential property will always make a profit for you. There is a rental market availed for each and every configuration ranging from a 1 BHK, 2 BHK, 3 BHK, a studio apartment or a luxury villa. The only criteria is to consider the location with respect to the configuration and one can be rest assured. For instance, in an area that is near a CBD will see more of working professionals choosing between a 2 BHK and a 3 BHK and an area near educational institutions will see more of students looking for a 1 BHK or a studio apartment. The rental yield across many Indian cities like Mumbai, Pune, Bengaluru, Gurugram, etc. are very enticing making the investments in a residential realty segment a lucrative deal.
The rentals change every 11 months or for the period the contract is made, thus revising the value and generating good income. Additionally, there are people who are ready to pay higher rentals for properties which have some cosmetic changes according to their requirements. Home improvements like a modular kitchen, electrical fittings with air-conditioner, hot water geysers, storage options in the form of cupboards, lofts etc. are preferred and fetch better rentals when you compare with another property of the same area in the same project that is unfurnished and let out as it is. So, it's a good idea to assess the market requirements every time you look at renovating the property.
Capital Gains: Given the possibility that India's rise in population level along with the growth in per capita income the demand for houses is bound to be stiff over the next 10-15 years. The supply of real estate, however, cannot be infinite with land being a limited resource which in result in higher property prices from a long-term perspective. So, a residential real estate investment can potentially lead to generating capital gains. One should also keep in mind the returns from capital gains on real estate can be region specific and specific to a particular project also. It would be in one's advantage to invest in real estate that has a good infrastructure boom for good returns in capital gains.
The writer is managing director of Transcon Developers
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