In India, every citizen dreams that he should own a house. For this, they are always hustling for finance or proper guidance. The core problem they face is decision-making, whether to rent a house or own a house. However, for people who can afford a house, the choice between buying and renting a house is always tough. Well, the fact that both the cases have different kinds of advantages and disadvantages too and to know and understand them is challenging but very beneficial. Thus, it is necessary to make people aware that investment in real estate is a perfect source of asset creation and a safe way to spend money. Let’s understand all the facts from all dimensions.

Advantages of Owning a Home Over Rental Priorities

Well! How great it would be to live freely in the owned house! Yes, it is still the dream to own an abode for self-satisfaction and self-security. Everyone would have lived in a rented home or something related to it at any phase of life. How about owning an asset? The decision may be typical and tough but isn’t an impossible one. It holds a huge advantage behind it for the betterment of family and also for finance. It is better to pay monthly EMIs than monthly rents, wherein they are not the generation of assets but rather a kind of expenditure incurred. 

As per data, 90% of the millionaires invest in real estate because they believe that ‘More money has been made in real estate than in industrial investment combined’. Isn’t that exciting? And the reason behind their statement is as follows:

• Passive Cash Flow

Tenants pay monthly rent, mainly recurring passive cash flow. This is the miracle way for millionaires to expand their annual wealth. What truly builds wealth is creating multiple passive streams of income that are not connected to your limited time.

• Appreciation 

It is a fact that over the long term, real estate’s value tends to rise gradually with time. Sometimes appreciation is a product of growth in the market, and sometimes appreciation can be ‘forced’ by making targeted improvements to a property.

• Federal Tax Benefits

There are many tax benefits to owning property. Many people aren’t aware of them, but they’re one of the best benefits of owning real estate, including depreciation, mortgage, and property tax deductions, no self-employment tax on rental income, or more. 

• Leverage 

Millionaires understand that you are not limited to your resources. You can leverage the resources of others to build your wealth. There are four ways to use leverage to enhance your real estate strategy and investment options. They are as follows.

• You can leverage money.
• You can leverage it with time.
• You can leverage other people’s experiences.
• You can leverage the property itself.

• Principal Pay Down

Principal paydown is a benefit real estate investors enjoy in building their net worth. As you pay down your mortgage with interest, with each payment, you pay back some principle and come closer and closer to owning the property free and clear. This allows you to build equity and wealth.

• Re-Finance

A refinance is when you put in a new mortgage on a property. If your property has equity (from appreciation plus principal paid down), you can do a cash-out refinance (pull out some of the equity gained). The best thing about a cash-out refinance is that it is not a taxable event. You have pulled out this income tax-free.

So, the real estate millionaire investor says, “Investing in real estate, not only does it make you money, but it allows you to keep a lot more of the money you make”. This was all about the millionaire talks but what are the actual pros and cons of buying a home is something worth interesting. Let’s have a closer look at it.

Pros In Real Estate Investment

Builds Equity

As the payment of the mortgage is completed and the home value is increased, it is the fact that the equity is rising. One can borrow against the equity to finance other big future goals. Later, the house can be sold and again be invested in buying a new asset.

Tax Benefits

Deducting these costs reduces the taxable income, and the lower the taxable income, the less will be the tax payment. Tax-deductible homeowner costs can reduce the amount of income tax you have to pay. There are seven tax deductions for homeowners. They are as follows.

• Mortgage Interest.
• Home-equity-loan interest.
• Discount Points.
• Property Taxes.
• Mortgage Insurance.
• Home Improvements.
• Home-office costs.

Customise your home

Every individual wants to have his home decorated with new designs and artistic factors, but the same can’t be done in a rented house. The homeowner is free to customise their house as per their imagination. He can construct new parts if they want to. On the contrary, the core point is security and freedom in the house.

Cons In Real Estate Investment

Maintenance

All the duties and maintenance care are done by the landlord, who also takes care of home repairs when an individual rents. Once you buy a home, you’re responsible for the time and money that go into maintenance. But somewhere I think it’s better to maintain our own home than maintain a rented one.

Less Flexibility

It’s harder to pick up and move when you own a home than rent. You must list and sell the home, hire a realtor, and pay closing costs if you buy a new place. Monthly bills are sometimes a burden for a common individual’s wallet, leading to an increase in the monthly budget rather than a predetermined one.

If we compare, there are more pros and fewer cons, which results in buying a house being much more convenient and satisfying than renting a flat. If you have a target of buying a house but have some issues related to finance or investment, then make sure to have a proper consultancy with intellectuals or real estate investors that will help you make the perfect decision in buying an asset. Turn your Dream House into reality and Invest in it!