33.21 When does Real Estate make sense in your portfolio?

In our previous newsletters, we covered why official return data is not correct for Real Estate Markets.
Just to reiterate:
They do not take into account

We also looked at why Real Estate as an asset class should be considered.
But when does it make sense to you,
That’s what we will cover today.

1. You need a Hard Asset as a Hedge.

This is what we saw from the Global Macroeconomic data.
High Debt and Inflation:

This Hedge can be any hard asset:

They are all good.

But Real Estate would make more sense to you when you have at least 25-30 Lakhs of liquid wealth to put as a downpayment.
The issue is that lower ticket properties than this won’t serve the same purpose that you think.
That’s the tricky part, there is more depth to each type of property.

We will cover this in-depth in the coming newsletters.
Plus you need this amount to book a Real Estate property that is worth ~1Cr.

2. Cashflows

This is one of the biggest benefits of owning a Real Estate.
More specifically, one that brings in rent or has any type of business on it.

This means that you get a monthly fixed income.
But that’s not it. This helps you circumvent the volatility.

Let’s say that you are an Equity Investor.

Picture a short-term correction in the market.
Since you are well versed, you know that this is just a temporary pullback.

You will get numerous such opportunities,

Take a look below:
Cashflows here help massively in 2 ways:

  1. It helps you maintain your investments during cases of emergencies. You won't need to pull any money out of your Liquid Investments.
  2. You can invest this extra amount more aggressively in such situations.

Bulk Investing is how you make above-average returns.
But this requires cashflows.
And that’s how Real Estate can really help you.

If you have just one source of income, this is a great way for you to build a new income stream.

3. Diversification

At the early stages of your career,
You are most likely fully invested in the Equity markets.

And that’s completely fine.

But once you hit a threshold,
You need to diversify.

Good Real Estate can greatly bring down the risk of your portfolio.
And it's going to be more of a requirement going forward.

Real Estate as an Investment is one of the best options out there.

But the issue stands that the market is hard to comprehend.


Thoughts 🤔 by Soumendra Kumar Sahoo is licensed under CC BY 4.0