Residential Home vs Investment Asset

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Real estate can be daunting when there is no proper guidance on investment choices. But real estate is also the fastest way to grow your wealth. Most Best Developers in Hyderabad would agree that there is no one way to invest that works for everybody. Individual circumstances, income and many other factors play a role in deciding what is best for each. Today let’s achieve clarity by drawing the main advantages and disadvantages of owning a home vs investing in an asset.

Owning a Residential Home

A primary home or residential home is a home that you live in. It is often purchased with intent for personal use rather than generating gains.

Advantages:

Building equity: The longer you own your home, the more equity you are building. Owning a home also allows you to borrow money if required and build wealth.
Stability: You will never have to worry about landlord demands once you won a home. You can decide how, when and why you need to modify or sell the property.
Tax benefits: Owning a home qualifies for tax breaks. So, you are essentially saving money by purchasing a home.

Disadvantages:

Tricky valuation: Residential property’s value should ideally increase over time, but it doesn’t always. Events outside of your control can reduce your home's value.
-Extra costs: With owning a home comes with home maintenance. You are responsible for repairs and other expenses like insurance which often total 2%–5% of the home's price.
Investment limitations: Since home costs are high these days, you invest a large chunk of your money into one investment: your house. This may limit your investments in stocks or other investments due to financial constraints.

Owning an Investment Asset

An investment asset is a home or land that is purchased for gains such as rental income. In most cases, investment asset is not purchased for personal use.

Advantages:

Low maintenance: Investment property is low maintenance compared to purchasing a residential home as you don't need to incur upfront costs like home designing or renovations.
Income generation-If your real estate investment asset is purchased in a great location, your income through rent is higher in which case you can enjoy profits even while renting a place for yourself.
Tax benefits: An investment property is entitled to many tax benefits. Many banks grant investment loans that can be used for paying less personal tax.

Disadvantages:

Personal gratification: Since the asset is usually not for personal use, you may feel no personal gratification which is an advantage of owning a residential home.
Longer sale: Selling an investment asset might take longer if it is agricultural land since many prefer to invest and occupy properties.
Revenue fluctuations: Your investment property will only generate returns immediately if it is tenanted. Sourcing tenants is solely dependent on the locations and circumstances. Since Covid, many investment assets suffered fluctuation in incomes or no income at all.

Investing in real estate has a proven track record to provide income and growth over the long term. It is a rewarding experience if you trust reputed developers and builders like Lakshmi Infra. Lakshmi Infra has a panel of professionals who will help you understand which type of real estate investment suits your lifestyle. Lakshmi Infra is a pioneer in offering Flats & Villas for sale in Hyderabad. If you’d like to talk about your real estate investment goals, please don’t hesitate to contact us. We specialise in high-return properties.

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