Manik Anand | 19 Mar, 2023
Real estate is one of the most intensely traded investments
in today’s world. There is always a new transaction involving either a newly
acquired property or an existing one at regular intervals. The earning
potential in the real estate industry is almost always on the higher side. The
magnitude of the transactions invites a lot of new faces into the industry,
while also inviting more investments from existing investors. At the same time,
however, if you’re new to the industry, you would have noticed its intensity as
well as how it might seem slow-moving at times. When getting into real estate,
it should be noted that this is more of a long-term investment than a
Your portfolio should be treated more like a partner than a
simple short investment. The more time and money you invest in your properties,
the more their value rises. A common practice in the sector, capital
appreciation ensures higher returns for investors. Adding more facilities to
your property makes it more desirable for potential tenants, and it also helps
in attracting more financially well-off clients.
When it comes to real estate, cashing out early can also
take a toll on your profits. As someone who owns real estate, you are entitled
to many tax benefits, which include deductions on your taxable income as well
as lower tax rates. A lot of these benefits are met on maturity of the contract
period. Premature termination or cashing out results in a loss of benefits as
well as extra charges which will burn a hole in your wallet.
Real estate is a highly tangible investment, but it is
equally tough to let go of, i.e., it has very low liquidity. Most forms of
investment have a very fluid and constantly moving market, where buyers and
sellers are always in demand for transactions. Real estate, however, is not the
same. Once your property is on the market, there is a wait for the right buyer.
This wait takes weeks, months, or even years. Tenants have their own specific
preferences for the property of their choice, be it commercial or residential.
They finalise the purchase only after these criteria and their budgetary
preferences are met.
Real estate investments taken in the long term are
relatively unbothered by factors such as inflation and other variables. The
terms and conditions of the time period and money involved are as stated in the
contract, and there is no negotiation at the professional level. Short term
investments are prone to many financial risks, and the gains incurred are
minimal. Smart investors can also keep earning rental income from the
properties they hold, for as long as they hold them.
In conclusion, real estate should be viewed as a long-term
partnership rather than a short-term investment. By embracing a partnership
approach, real estate investors can reap the benefits of a tangible asset with
long-term stability, potential for appreciation, rental income, and tax
benefits, all while diversifying their investment portfolio. With the ability
to leverage the property for further investment opportunities, make improvements
that add value over time, and reduced volatility compared to short-term
investments, real estate is a smart choice for those looking to build a secure
* The author is Co-Founder & CEO at White