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03 April, 2020
The world continues to wrestle with the outbreak of COVID-19. In order to keep the risk from snowballing further, the Indian government has taken the prompt & decisive stance of putting a complete lockdown in effect. Consequently, nowadays, most of us are working from home. Life outside has nearly come to a grinding halt. No matter how inconvenient it seems, it is probably the only solution to prevent the perennial Coronavirus from further spreading.
Although our daily routines have been affected, this does not imply people should lock themselves inside their homes, put all their plans on hold & only watch the worrying news on TV about this menace. These are some of the best times when one can spend time with the family, pursue various hobbies & introspect. The current situation is also an ideal time to think about investing in sources of passive income. After all, some of the best opportunities emerge out of a crisis.
Zoning in on different options, one can look into various options such as SIP, term plans, stock market & Real Estate. Though every investment option has its pros & cons, as of now, when the stock market is bearish & the banking sector is in a tailspin, Real Estate might be a great asset to bet on. If one wants to de-risk yet make a commendable return, numerous residential & commercial Real Estate options are available.
Plenty of attractive offers: Recognizing the opportunity at hand, developers are coming up with a lot of attractive offers. Property prices have already corrected in the past few quarters. After COVID, many developers are further giving discounts & attractive offers to maintain their financial books. There are projects where one just needs to pay 5% now to book the property. The rest of the payments will commence after 60 days. By that time, it is expected that the crisis will mostly abate.
However, such schemes are a transitory phenomenon that developers are launching to boost the sentiments. Prices have already bottomed out & once the situation returns to normalcy, such attractive schemes will also evaporate. Hence, this might be the best time to buy Real Estate. It should not be a surprise if someone gets a ready-to-use property for a price that is equivalent to a new launch.
Higher Yields: Real Estate can offer risk-mitigated competitive returns. Although residential Real Estate has stayed stable in recent years, commercial Real Estate continues to post attractive returns. A commercial asset in a prime location can easily give an average annual appreciation to around 7-10%. At a time when the share prices & financial markets are volatile, such a return could be the game-changer.
Concurrent Rental Income: Real Estate can render constant income in the form of monthly rentals. The rental component always makes Real Estate a very unique proposition to invest in. A quality commercial asset can give returns to the tune to around 5-8%. Likewise, residential projects can give returns of around 2-3%. Therefore, this is the perfect moment to cash in on those prospects.
Increased Liquidity: These are good times to invest in Real Estate as home loans are going to be cheaper. RBI has recently cut the Repo Rate by 75 basis points. The decline in the rate is a welcome step for the industry. Shortly, as a calibrated response to the reduction in repo rates, most of the banks will also reduce their home loan rates.
Viable Hard Asset: One of the biggest benefits of Real Estate is that it is a tangible asset. In a time when there is a tremendous amount of downside risk in investing in paper money, Real Estate is a much safer & secured asset to bet on.
Real Estate is a distinct asset class that can ensure commendable ROIs, hedge against inflations & offer recurring income in the form of rental yields. It, however, has its drawbacks, as liquidating a Real Estate asset will at least take 2-3 months. Nevertheless, investments in Real Estate are always made keeping a medium to a long-term perspective in mind. A short-term perspective might be counterintuitive.
So in these times of social distancing, do not just lock yourself. Make use of the isolation downtime, do some thorough research, learn about various sources of passive income & make the most of this time at hand to make meaningful investments.
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