One invests keeping in mind the longevity of the investment and how much risk one can take. Basis our understanding, we realise that when we invest keeping in mind say retirement, then the asset allocation will be much different from when one is 30 to when one is 50. In real estate investments, one can choose aggressive investments that have a potential for high growth but then there is higher risk attached to it. With retirement the time for money to grow reduces and one has a constant need to withdraw. So sometimes conservative investments, that are less risky and low returns also seem profitable.
Another factor to keep in mind while choosing an ideal mix of investment is:
- How soon will one want to divest
- How comfortable will one be investing a large chunk of income on investments
Keeping these in mind, one can choose to invest in one or all the options available
- Residential properties: Timing is a key factor to a good return on investment. If one is looking to earn regular income then there is no risk of when to exit. However if capital gains is the sole aim, then timing is a critical factor. While it is advisable to hold a property for at least three years but statistics show that good returns come only between five and seven years. For capital gains it is a good move to acquire under construction properties. The only factor going against investing in residential properties is to know the key times to invest and sell. One may end up buying at a price high hoping the prices will go higher but in reality the prices go down and one may end up making a loss, if exiting to soon.
- Commercial properties: Investing in commercial spaces helps one diversify the real estate portfolio while earning regular rental income. For the business savvy investor, commercial spaces both office and retail spaces are a good bet. Unlike stock market fluctuations, real estate investments are far stable and also the rental income is approximately 10% of the property value in a year, quite high than what one would earn from a residential property. Also a factor to keep in mind is that higher returns would mean higher investments unlike investing in a house.
- Mixed use properties: These properties are seen as the golden opportunities by both the real estate sector as well as investors. While real estate developers have diversified their risks by bringing an element of commercial as well as residential into their projects, investors and buyers have also felt comfortable to gain on the benefits offered. Certainly successful concepts around the globe, mixed use properties offer home buyers to be near their work place and much requires social infrastructure. Just the thought and dream of many to stay in the vicinity of a shopping mall and other luxurious amenities is a win-win situation. Developers are bringing in residences, a shopping mall, a hotel and offices together in many metros.
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