- By Aditya Pratap Singh
- Wed, 02 Oct 2024 02:06 PM (IST)
- Source:JND
Real Estate Investment: Investing in real estate has been considered one of the most reliable sources for earning wealth. While many are drawn to the potential for quick profits, the real strength of real estate lies in its long-term potential. It’s not a field for those seeking instant gratification, it rewards those who can take a patient, strategic approach. Over time, real estate investments tend to appreciate, and those who hold on to their properties for years or decades can see significant financial gains. This guide explores how patience is the key to gaining long-term profits in the real estate sector.
Importance of Time in Real Estate
Unlike stocks or cryptocurrencies, real estate is typically a slow-moving market. However, the benefit of this is that the longer an investor holds onto a property, the more potential there is for its value to grow. Real estate values are driven by a variety of factors, including inflation, demand, and infrastructure development. For those with the foresight to invest in emerging areas or growing markets, time will often work in their favour.
Abhishek Raj the Founder & CEO of Jenika Ventures said, “Real estate is not for the faint-hearted or the impatient. It’s a long-term game where the real value of your investment is revealed over time. The true wealth-building potential comes after years of holding onto a property, allowing for appreciation and rental income to compound. As investors, it’s important to remember that chasing short-term profits often leads to missed opportunities for significant growth in the future. A successful investor always knows that enduring the ebbs and flows of the market will eventually result in increased value as property prices tend to rise over the long term.”
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Dealing with Market Fluctuations with Patience
Just like any financial market real estate market too experiences different phases of growth, stabilisation, and contraction. The advantage, however, is that these cycles tend to move more gradually in real estate compared to other markets. As a result, savvy investors can often anticipate downturns and recoveries, using them to their advantage by staying in the game even when times are tough. During market corrections, less experienced investors might be tempted to sell out of fear or impatience, potentially losing out on future appreciation. However, experienced investors understand that real estate cycles offer opportunities to acquire undervalued properties or ride out temporary dips, ensuring long-term profitability.
In the dynamic landscape of real estate investing, adopting a strategy of securing long-term leases can be particularly advantageous, especially within commercial markets.
"Patience is key when investing in real estate, especially when looking for long-term wealth gains. Long-term capital appreciation is the substantial financial gains that can be obtained by holding a property for more than two years. Property values might rise three times or even ten times in locations like Delhi NCR and Gurgaon due to infrastructural development. New highways, metro lines, business centers, and social infrastructure including hospitals and schools all contribute to the city's slow but steady growth. The benefits of growing property prices and advantageous 20% tax rates increase with the length of time the property is owned. "This methodical approach promotes significant, long-term wealth accumulation," says Bric X Infra Founder Mr. Sher Singh Rathore.
As the market matures and brands solidify their presence, the return on investment (ROI) can see significant growth. Generally, it takes two to three years for a new market to fully develop, making this timeframe critical for investors. During these early stages, those opting for short-term leases may find themselves vulnerable to market fluctuations, while long-term leases offer much-needed stability.
As demand increases and the market reaches its peak, investors with long-term agreements can benefit from rental increments of 15% or more. This consistent growth not only protects against potential vacancies but also ensures a reliable income stream. In markets with a proven track record, opting for long-term leases not only maximizes ROI but also provides peace of mind. Additionally, by exercising patience and implementing strategic planning, investors position themselves to gain substantial rewards in the evolving world of real estate.
In short, real estate is an investment that rewards those who have patience and prefer to think about the long term. The key to unlocking its full potential lies in understanding that real wealth is built over time, not overnight. Therefore, by embracing the cyclical nature of the market, enduring downturns, and leveraging rental income, investors can set themselves up for substantial, long-term gains.