Real Estate Investment: A Smart Way to Invest in Real Estate with Limited Capital
India’s real estate market has become the most popular investment destination in Asia Pacific, attracting more than $23 billion in investments since 2018, with 77% of total investments coming from Asia Pacific, according to Colliers’ APAC Trends. Investor outlook for 2023. The company also reported that institutional real estate investments in India grew 27% year-on-year in the first nine months, with both industrial and residential transactions increasing. According to Colliers, this increase is closely tied to India’s growth trajectory.
The data clearly indicates that the real estate market is full of opportunities and potential for good investment returns. Additionally, the RBI’s recent decision to keep the repo rate stable at 6.5% has boosted homebuyers’ confidence in the real estate market.
Before investing in the real estate market, you should consider certain factors. When purchasing residential property, evaluate amenities and neighborhoods. For commercial properties, research tax-free zones, proximity to warehouses, and road accessibility. Plan the development of the area over the investment period. Emphasizes investments that ensure strong cash flow and expected returns.
Investing in real estate is a great way to start your career, but many people are often blocked by the question, “How can I start investing in real estate if I have limited capital?” Now, let us understand some ways in which anyone can start their investment career in the real estate market with little capital.
Investing in a real estate investment trust (REIT) can be a great way to enter the real estate market without having to buy or own real estate. A REIT is a type of real estate investment trust (REIT) that offers investors the opportunity to participate in the profits generated by real estate owned by the REIT. These products allow investors to access real estate investment opportunities without the need to purchase or own the property outright. By investing in REITs, investors receive a portion of the profits generated by REIT properties. Because REITs are publicly traded on stock exchanges, investors can easily buy and sell REITs.
Recently, the concept of ‘fractional ownership’, which involves small investments in real estate, has been gaining popularity. Investors contribute funds to collectively purchase real estate through various Fractional Ownership Platforms (FOPs). This approach has proven to be cost-effective as it provides the benefits of owning luxury real estate without the significant investment. Fractional ownership also generates significant returns with a modest investment. Unlike traditional property ownership, which requires extensive paperwork, fractional ownership simplifies the process through online accessibility to the necessary documents. Investors can easily choose which properties to invest in and diversify their portfolio across different sectors and industries. Another approach to enter the Indian real estate market is through REMFs (Real Estate Mutual Funds). REMF (Real Estate Mutual Fund) is a mutual fund that pools individual investments and invests them in various real estate assets. Investors purchase units or shares of a fund, allowing fund managers to diversify their investments across different types of real estate. These professionally managed funds generate income through rents, dividends, interest, etc. and distribute profits to investors. As real estate assets increase in value, capital gains may accrue. REMFs provide liquidity as investors can buy or sell units on the open market. This investment method provides exposure to the real estate market without owning the property directly, allowing for diversification and professional management. However, it also carries market-related risks that investors should consider carefully.
Finally, there are several advantages to investing in real estate in small towns. The most obvious is the low cost of entry. Real estate in smaller towns tends to be cheaper than real estate in larger cities. This means you can purchase more property for less money, resulting in a higher return on your investment. Another benefit of investing in small town real estate is the ability to attract long-term tenants. People living in small towns are more likely to stay at home and therefore less likely to experience job change. If there is less competition, rents are likely to be higher.
Exploring evolving trends and promising statistics, the story of real estate investment in India is not just a financial transaction, but a story of adaptability, diversity and democratization of investability. In this ever-changing market, the door is wide open for investors to use their strategic choices and market insights to enter areas where opportunities promise both growth and accessibility.
