Inflation is a big issue that makes the rate of many things depreciate with time. But it’s real estate which is immune to the problem. Real estate prices do not go down with inflation. Rather with inflation, the value of rental properties and the prices of properties keep on going up. That’s why it’s sensible to invest in real estate when you have enough money in hand so that later in life, this can help you keep earning an income. In case you need to relocate or shift, you can sell off the property too and get a lot of money from this to carry on with life at a new place.
How to Plan for the Future
To plan for a secure future, whether you have enough securities and bonds and money certificates or not, you must invest in one thing, and that is real estate. Investment in real estate is much more profitable than to invest in shares, stock, or gold. The market and economy may rise and fall multiple times due to various national and international events, but real estate investments continue to increase in value. Therefore to plan for a secure future, you must invest in real estate now. Because even if you have liquid cash in hand or not, you will have the power of your real estate property.
Related: Buying a Rental Property vs Stocks: Which Is a Better Investment Decision?
How to Buy Investment Property from a Fixed Income
If you are a salaried individual and have a fixed source of income, then buying real estate investment properties at any stage may be difficult for you with the fixed earnings. Generally, salaried people have to cater to many household liabilities, and then only after catering to the fixed expenses of the month, can they use the rest of the money to spend on other things. Hence shelling out or squeezing out a lot of money for buying a rental property may not be an option for most salaried people. In that case, how do you buy the golden opportunity to earn in the future in a down market scenario? Well, the answer lies in taking a loan to buy an investment property.
You may ask why should you indulge in the ties of a loan when you are free from such tensions. Though it may sound very peculiar and insensible to you initially, gradually you will learn to grasp the concept- that this is probably one of the easiest ways, a kind of shortcut, to becoming rich. If you do not take this step at an early age, you may miss out on the opportunity, which brings us to our next point.
Start Planning for Buying Real Estate at an Early Age
At an early age, when you have just started earning, you have a lot of years ahead to plan life and slowly pay towards your debts. It’s during this phase of life that you may plan to take a loan to buy real estate. And if you do this now, then you would be able to opt for a loan with a fairly long tenure. A long tenure would ensure you have a lot of EMIs to pay the loan. This means smaller installment amounts, and therefore an affordable EMI. Hence it would be easy for you as the salaried person to make room for this EMI from your monthly fixed earnings. And therefore through a period of 10 to 20 years, you may easily pay back the loan, and in the meantime, you would own the real estate investment property in your name.
Related: What Age Should You Start Investing in Real Estate?
Starting early has a lot of advantages. Being younger, you would have lots of earning years ahead with stronger earning potential and better health and physical stability. Therefore, you will be able to mentally stay prepared to pay off the loan slowly, gradually bit by bit, through the years. By the end of your professional life, you would have owned the investment property- an achievement you will definitely be satisfied with. The amount invested in the real estate can be collected back then with a much higher return on investment if you use the investment property the right way.
What If You Fail to Pay the Loan Amount?
If you fail to pay back the debt taken, and if you by chance, for any reason are in poor condition to pay it back, then you may get into a bad situation. Neither would you get the ownership of the property until the debt is paid, nor would you be free from the dues and burden. In that case, you may have to take a quick and smart step to get yourself out of this situation. Debts and dues, when piled up, can affect your credit score.
You would not want your credit score to get lowered. Hence, the best thing you can do is consult a financial advisor who helps in debt settlement and consolidation cases. There are different organizations that can aid in debt management. Therefore, in case of confusion, you may take help from such resources and find a way to relieve your debt.
If you start now, you can create wealth, save well, take a loan and pay it back too, and in the process, buy real estate that would serve you later in life in any form. Real estate, once owned by you, is a great income-generating asset. Whether you sell it or not, you are going to see money from it. Hence owning real estate while paying off your debt can be quite a pleasant journey and a good decision to secure your future.
Keep in mind, however, that getting indebted is a decision that you must take on your own after seeing your budget. While it may be the key to securing your future with real estate, only take this step if you are sure you can handle it.
This blog has been contributed by Isabella Rossellini.