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Last updated: 19 Mar, 2023  

Realty.9.Thmb.jpg Your portfolio is your partner, not your investment

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Manik Anand | 19 Mar, 2023

Real estate is one of the most intensely traded investments in today’s world. There is always a new transaction involving either a newly acquired property or an existing one at regular intervals. The earning potential in the real estate industry is almost always on the higher side. The magnitude of the transactions invites a lot of new faces into the industry, while also inviting more investments from existing investors. At the same time, however, if you’re new to the industry, you would have noticed its intensity as well as how it might seem slow-moving at times. When getting into real estate, it should be noted that this is more of a long-term investment than a short-term one.

Your portfolio should be treated more like a partner than a simple short investment. The more time and money you invest in your properties, the more their value rises. A common practice in the sector, capital appreciation ensures higher returns for investors. Adding more facilities to your property makes it more desirable for potential tenants, and it also helps in attracting more financially well-off clients.

When it comes to real estate, cashing out early can also take a toll on your profits. As someone who owns real estate, you are entitled to many tax benefits, which include deductions on your taxable income as well as lower tax rates. A lot of these benefits are met on maturity of the contract period. Premature termination or cashing out results in a loss of benefits as well as extra charges which will burn a hole in your wallet.

Real estate is a highly tangible investment, but it is equally tough to let go of, i.e., it has very low liquidity. Most forms of investment have a very fluid and constantly moving market, where buyers and sellers are always in demand for transactions. Real estate, however, is not the same. Once your property is on the market, there is a wait for the right buyer. This wait takes weeks, months, or even years. Tenants have their own specific preferences for the property of their choice, be it commercial or residential. They finalise the purchase only after these criteria and their budgetary preferences are met.

Real estate investments taken in the long term are relatively unbothered by factors such as inflation and other variables. The terms and conditions of the time period and money involved are as stated in the contract, and there is no negotiation at the professional level. Short term investments are prone to many financial risks, and the gains incurred are minimal. Smart investors can also keep earning rental income from the properties they hold, for as long as they hold them.

In conclusion, real estate should be viewed as a long-term partnership rather than a short-term investment. By embracing a partnership approach, real estate investors can reap the benefits of a tangible asset with long-term stability, potential for appreciation, rental income, and tax benefits, all while diversifying their investment portfolio. With the ability to leverage the property for further investment opportunities, make improvements that add value over time, and reduced volatility compared to short-term investments, real estate is a smart choice for those looking to build a secure financial future.

* The author is Co-Founder & CEO at White Knights Realty.

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