Throughout history, there has been a constant desire to acquire real estate, whether it was kings expanding their kingdoms through war or modern-day millennial couples purchasing their dream homes. The appeal of investing in prime real estate lies in the significantly higher returns it offers compared to traditional investment options. Furthermore, the demand and value of real estate never decrease, making it a potentially advantageous investment.
Investing in real estate is a time-tested and widely favoured method of wealth accumulation. In India, real estate has always been a reliable choice for investors due to its consistent growth and lucrative returns.
However, many people believe that investing in real estate necessitates substantial funds and specialized knowledge. Nevertheless, by obtaining the appropriate guidance and understanding, you can commence your Indian real estate investment journey with as little as INR 10, 000.
Investing In Real Estate Without Buying A Property
Many people look for answers to how to invest in real estate. However, real estate investments do not necessarily involve property ownership. There are plenty of other opportunities that allow investors to reap the benefits of real estate appreciation, without the need to shoulder the continuous responsibilities of building maintenance.
Investors who choose to invest in real estate beyond the traditional sense of buying property, have the option to invest across multiple locations and property sizes along with different classes of real estate.
While these steps may serve as predecessors to potential property-owning in the future, you may also find the returns from these real estate investments compelling enough to avoid buying a property altogether.
Here are ways to invest in real estate:
Real estate investment trusts, or REITs, are businesses that own and manage properties to make money. firms that manage portfolios of high-value real estate assets and mortgages are known as real estate investment trust firms. For instance, they receive payment for renting out houses. The rent that was successfully collected is subsequently distributed to the investors as revenue and dividends.
REITs often give investors the chance to own expensive real estate and give them the chance to receive dividend income, which will gradually increase their capital. Investors may take advantage of the chance to increase their wealth and produce income at the same time in this way.
This investment option allows both large and small investors to store their money and profit accordingly. Small investors could try to combine their funds with those of other investors to make a larger investment in significant commercial real estate projects. Data centres, infrastructure, healthcare facilities, housing complexes, and other properties are incorporated in REITs.
REITs are one of the most expensive investment options since they own and manage pricey real estate holdings. Investors who park their money in REITs are therefore individuals who have a lot of capital available. Large institutional investors, for instance, can profitably invest in various financial instruments, including insurance companies, endowments, bank trust departments, pension funds, etc.
Real Estate Crowdfunding
Real estate crowdfunding, sometimes referred to as property crowdfunding, is a method of raising capital for real estate initiatives by contacting a group of investors and requesting them to contribute a modest quantity of money to a project. Simply said, it’s a method of raising capital that lets modest real estate investors participate in significant projects.
Real estate crowdfunding is sometimes known as real estate peer-to-peer lending or project finance. Money is raised by using a crowdsourcing service on the internet. To get money for launching or expanding a real estate project, one party (the borrower) registers with a platform. In exchange for a high rate of return, a platform is utilised by a third party (the investor or lender) to make investments.
Real Estate Investment Groups
The best option for those who want to own a rental property but don’t want to handle the management problems is real estate investment groups (REIGs). One requires a capital reserve and financial resources to invest in REIGs.
REIGs are little mutual funds that choose to invest in real estate. In a typical real estate investment group, a company buys or builds a collection of apartments or condos, and then allows investors to purchase them through the company to join the group.
Self-contained living units can be held by a single investor in one or more units, but the company managing the investment group supervises all the units, takes care of maintenance, posts vacancies, and conducts tenant interviews. The business is compensated for carrying out these management responsibilities by receiving a percentage of the monthly charge.
The rent for each unit is typically bundled in a real estate investment group lease to guard against irregular vacancies, and the lease is typically in the name of the investor. This implies that you will still generate money even if your unit is empty. As long as the vacancy rate for the pooled units doesn’t drastically rise, there should be enough money to cover expenditures.
Real Estate Mutual Funds
Real Estate Mutual Funds (REMFs) are another way to invest in Indian real estate. A REMF pools money from multiple investors and invests it in real estate properties. REMFs offer better diversification as compared to investing directly in real estate. They also offer more liquidity than REITs. You can start investing in REMFs for as low as INR 1, 000.
Peer-to-peer (P2P) lending is a relatively new way to invest in real estate. P2P lending platforms connect investors with borrowers who need funds for real estate projects. As an investor, you can lend money to the borrower and earn interest on the loan. P2P lending is a high-risk investment, but it can offer high returns as well. You can start investing in P2P lending with as low as INR 5, 000.
FAQ: How To Invest In Real Estate In India
Is it safe to invest in real estate without property ownership?
As is the case with all investment options, there can be potential risks involved in real estate investments. However, it is recommended to seek professional assistance before beginning any investment.
Is real estate a good investment in India?
There are several benefits to investing in real estate. Consistent income flow, strong yields, tax benefits, diversification with well-chosen assets, and the ability to leverage wealth through real estate are all advantages that investors may enjoy.
What is the minimum amount to invest in real estate?
The minimum amount to invest in real estate in India depends on the investment option. Direct investment can require significant capital, while REITs and fractional investments can be made with as little as Rs 10,000.
Investing in real estate in India can be a lucrative venture, even without purchasing a property. There are various ways to invest in the real estate market, such as through real estate investment trusts (REITs) or by investing in real estate crowdfunding platforms.
These alternative investment options allow individuals to diversify their portfolios and potentially earn passive income from the Indian real estate market. By exploring these non-traditional avenues, investors can take advantage of the opportunities presented by India’s booming real estate sector.
So, if you’re looking to enter the Indian real estate market but don’t want to buy a property outright, consider exploring these alternative investment options to make your mark in this thriving industry. Avail the expert advice from professionals at SustVest to help build your wealth.
Founder of Sustvest
Hardik completed his B.Tech from BITS Pilani. Keeping the current global scenario, the growth of renewable energy in mind, and people looking for investment opportunities in mind he founded SustVest ( formerly, Solar Grid X ) in 2018. This venture led him to achieve the ‘Emerging Fintech Talent of the Year in MENA region ‘ in October 2019.