Types
of Investment:
Residential
Rental Properties: Residential properties, such as
single-family homes, bungalow, or apartment buildings, are purchased with the
intention of renting them out to tenants. Rental income provides ongoing cash
flow, and the property can appreciate in value over time.
Commercial
Real Estate: Commercial properties include office
buildings, retail spaces, industrial properties, and warehouses. Investing in
commercial real estate involves leasing the space to businesses or companies.
Commercial properties typically offer higher rental income but may require more
significant upfront capital and expertise.
Real
Estate Investment Trusts (REITs): REITs are investment
vehicles that pool funds from multiple investors to invest in a portfolio of
income-generating real estate assets. They can be publicly traded on stock
exchanges or privately held. REITs provide an opportunity for passive real
estate investment, as investors can buy shares in the trust and earn dividends
from rental income and property appreciation.
Even you can start by investing Rs. 500 rupees in REIT they can manage
to invest it in multiple real estate mutual funds.
Destinations
Rentals Properties: Properties in popular tourist
destinations or vacation spots can be purchased and rented out to travelers on
a short-term basis. Vacation rentals can provide higher rental income during
peak seasons but may also involve higher operating costs and more management
effort.
Real
Estate Development: It involves purchasing land or existing
properties and convert /developed them into the new constructions and sailing
it for good price.
There are several
reasons why someone might choose not to invest in real estate. Here's an example illustrating some of those
reasons:
Narayan is a software
professional having good job and salary, he is decided to invest his money in real
estate or something different where he can get a good returns in future. So he started searching many investment
options like Mutual funds, Stock market, real estate etc., after carefully
studied, research and considering all the options he decided to invest in other
options rather than go for real estate investment for the following reasons:
High
Entry Cost: Narayan found that the initial
investment in real estate is too high like down payment, cost of possession, renovation
expenses and maintain the property.
Since he is young and afraid to invest al his savings in single
investment.
Lack
of Liquidity:
Narayan always giving importance to liquidity i.e., the ability to
easily fund availability in case of emergency or need. Real estate investments are illiquid and like
a long term investment, it takes maximum time to sell property. Narayan anxiety that quite possible he has to
face financial difficulties in nearby future and that need immediate liquidity.
Market
unpredictability: Real
estate is unpredictable market and depends upon economic downturns, if the
economic condition is not good the quite possible the value of properties will
be down. So he worries about significant
losses during the market downturns.
Responsibilities:
Narayan also considers the responsibilities like deal with tenant issues,
Property repairs and maintenance , property renovation and other task would be
time and money consuming task. He is not
sure if he has the time and energy to take care of all these responsibilities effectively.
Alternative
Investments Plans:
Narayan discovers that there are several investment opportunities that
are better options align better with risk tolerance, liquidity preferences and
lifestyle. Instead of Real Market
investing he considers to investing in Mutual funds, stocks and bonds, which
offer flexibility and easy to manage.
At the end, after
evaluating and calculating all the options, Narayan decides that real estate
investment is not the right option for him and he has to opts other and better suitable
investments plans which is suits his financial goals.
