Investment is a great way to secure your financial situation. If done smartly and effectively, investment can last you through tough times or in your retirement years. There are multiple ways for people to invest their earnings into to preserve the value for needed times. Many individuals will go for investment in stock market, others will invest into bonds, and some open up saving plans with banking systems and so on.
In the previous few decades real estate market has been recognized as a great investment opportunity for people to move towards. With the growing rate of population that increases the demands of living space and property has surged development in real estate at lightning’s pace. Only in the matter of a few years the investment and development of the sector has sky rocketed. Real estate business is something that has grown exponentially in matter of a few years only.
Why is that so? That is why we are here. We will take you through a number of reasons for why real estate is being recognized as a prime investment opportunity. What value and financial security can get one out of it and how will it help one’s finances flourish. We’ll take you through points through which you will realize that real estate might as well be better as compared to other investment opportunities.
Property value appreciation:
Real estate has the amazing advantage of appreciation (increase) in the value of its assets. A property of an idea can always swindle up and down in unfavorable market conditions however it should not be over looked that with multiple downs in value, the property of a good real estate investment will eventually go up. This means that you can get the value back from what you have invested into real estate.
This can help derive desirable cash flow rates. This term is applied to the financial amount that is left after the property’s price has been paid off and the relative maintenance expenses are also cut out. Real estate has the predictability of providing its investors with positive cash flow that can go a long way to benefit the investor.
Improvability of real estate:
With investment in assets of share holding, stock market or bonds and gold; the person that is putting in their money has little to no control over the pending fate. You cannot expect a single person to appreciate the value of gold, that is dependent on factors far from the reach of any investor. On the other hand when someone invests in real estate properties they have the option to modify and polish it that can increase its overall value on the market.
Improvement on property can come in many different shapes and sizes for an investor. In case of a person who is buying a land plot, can go as far as building a house, office or any desirable building (keeping within the area’s laws) on that piece of last. This can increase the property of a barren lone standing plot drastically!
Other forms of improvements of investments can be made on the purchase of a house or a preexisting commercial use building. Such improvements can be in the form of adding another storie to a house. Trying to add value by making small improvements like fresh coat of paints, replacing old worn out doors, gates, windows etc can also help to increase the value of an old house. On office or commercial use buildings similar modifications can be made to add value to the property. Of course an improved property goes up in its value on the real estate market; the investment for improvement can outweigh the price appreciation due to them. Improvements are quite favorable for real estate investors and these options are absent from other types of investments.
Passive income:
Real estate is a form of investment that can lead to generation of passive income. How is that so? Real estate offers an investor the option to rent out their property. Though lone standing plots cannot be rented out; properties like houses and commercial use property like grocery shops are commonly rented out by their owners. Once in real estate if you invest and become the owner of a functioning property, there is plenty of fish in the sea to advertise to for rent.
There are thousands of individuals that look out for property for rent maybe someone is moving to a bigger city or trying to look for a temporary living space. A lot of people who cannot afford to buy their own house will often rent out houses or flats for living. Some people rent a property near their work space for the convenience. Whereas many business owners will move their shops to an a different area will rent out space.
Renting is a practice that allows tenants to live under a property with a lease or contract with the owner to pay them monthly rent that goes directly to the owner’s bank balance. In other forms of investment such practices are not possible. Therefore passive income in the form of rent is another perk that estate investors enjoy.
Community Building:
Real estate investment is not only beneficial for the investor; it can also help in community building. This can be in two terms. Firstly the obvious; real estate market works on the demand of residential and commercial property. By investment in property and property projects; new living spaces equipped with ample supply of facilitation are built up over the years. This helps to build an overall community in an area.
For already well established communities real estate investment also helps to polish the living standards of a community. Real estate investment often relies on buying out of property and making investments in form of improvements (as discussed above). This can help a community to flourish. Over the years a few properties in an area will wear out of shape or might be abandoned. Through investment in such abandoned or worn out real estate, the investor aims to appreciate its value by making changes up to par with its surroundings. This can help to not only improve the overall aesthetic of the community; it can revive the spirit of a rundown property as a fully functioning living space. When such space gets bought for living purpose, he community further flourishes.
Provision of living space:
Property and home owners can further aim the privilege of increasing the livable space on the market. This again can be done in varying forms; firstly real estate investors can build upon their existing buildings according to property laws that can allow them to increase the living space by adding a room or two. By holding the power to be able to rent out their property, home owners and real estate investors can further help out a community or persons who cannot afford a living space.
Creating employment opportunities:
More on the greater benefits of real estate investment other than purely personal benefits are that it can help to boost the economy. Real estate investment can help do so by providing contractors and builders as well as the real estate agents that manage the property more employment opportunities. Moreover the construction costs, the refurbishing costs on property will also stimulate activity n the commercial sector of a locality regulating the economy in that specified area.
Diversifying your portfolio:
For lay men we discussed a few points on how real estate is a superior form of investment, however in another perspective we would like to shed light on importance of real estate for businessmen. Business owners often like to invest into different kinds of markets to further expand and diversify their range of skills with management and experience. In such cases for all of the above given advantages too; real estate is an amazing investment opportunity on its own.
Real estate investment can seem daunting for business owners who don’t have enough know how of the market however with smart decisions and good management they can easily step into the boundary of real estate investment.
Conclusion:
Real estate Pakistan is a vast field for anyone to invest into. As the size of its scale; it also comes with tons of benefits. This will be the part one of our 2 part article on the benefits of real estate investment.
In part one we went over some key benefits of investment in real estate sector, all the while lightly comparing it to other types of financial investment. We also looked over some benefits that help out an entire area and community to flourish by investment in real estate. This is another major advantage of real estate investment that goes beyond personal benefit on the investor.
There is plenty more to real estate investment that what meets the eye as a viewer, we’ll indulge in the topic deeper in part 2.
