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Tata Capital > Blog > Why Investing in Property is a Good Idea?

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Why Investing in Property is a Good Idea?

Why Investing in Property is a Good Idea?

According to experts, few other investment options offer the same opportunity of creating personal wealth as real estate in the long run. By adhering to the basics of investing in property, you will be able to earn good returns on your money.

When investing in property, it is important to have knowledge and spending time to research the dynamics is imperative. Knowing when and where to invest is possible only when you have analyzed every aspect of the market and the conditions influencing it. You must consider factors such as property location, phase of the market cycle, property type, and future prospects to make an informed choice.

You may also consider seeking advice from an experienced professional. Seeking expert guidance may be the possible difference between making high returns and losing your investment. Keeping all of this in mind, investing in real estate is less volatile than investing in financial instruments like share market.

Here are three advantages of investing in property.

1. Steady growth over the long-run

Compared to equity and bond markets, the property prices see a steady growth in the longer period of time. The real estate market follows a predictable cycle based on certain factors. These cycles may help you make more accurate predictions about the future. To maximize your returns with other asset classes, you need to exit at the right time. However, to make high returns, it is not mandatory to sell your property when the market is at its peak.

2. Useful to avail of a home loan

Even if you have taken a home loan on your property, you retain control over the asset. Moreover, it is one of the few investment products that may be leveraged and used as collateral to avail of a loan. Most financial institutions offer home loans using the property as collateral because real estate is an appreciating asset. This protects the lenders as they will be able to recover their amounts in case you default on the payment of your house loans. Because financing real estate is less risky, lenders offer low home loan interest rates on these loans.

3. Hedge against inflation

When you invest your money, it is important that your returns are more than the rate of inflation. Real estate investment is one asset class that offers you hedging against rising inflation. As the value of your property rises over the years, the outstanding amount of the home loan reduces. Furthermore, you may earn rental income from your property, which allows you to repay the loan faster. Including property in your investment portfolio is a sound decision. If you keep in mind the basic principles of putting money in properties, you are sure to get good returns on your investment.

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