33.22 What are the Different Types of Real Estate

Now that we have an overview of Real Estate as an Investment,
We can start taking a look at what exactly comes under Real Estate investment.
More specifically what are the different properties that we can consider?
Broadly speaking you will normally get 3 options:

Let's dive into them one by one:

1. Commercial Real Estate

This could be a shop, cafe, etc. i.e: Some kind of business that you have set up.

As long as you are able to hike up your prices as per the rise in cost.
(This will depend on how good your business is).
Ideally, these types of properties will give you a high rental yield and they also normally include long-term contracts.

2. Agriculture Land/Plot

The first thing to note here is that any income generated from Agricultural Activities in India is tax-exempt.
However, doing agriculture on land is not easy and requires capital and understanding of local laws.

Plot means you own a piece of land, and you are free to do whatever you want with it.
This provides flexibility.
The opportunity to add value here is really high.

3. Residential (Housing)

This is the type of property that most of us go for. Here the options are Flat or Villas.
In a flat, you are not exactly owning a full piece of land but just an Undivided Share of the Land.

This is collectively owned by all tenants of this apartment.
UDS is seeing a negative trend in India

We will be discussing this in the later newsletters.

We will also take a deeper look at Flat vs Villas in the coming newsletters.

Old flats might similarly lose value,
So you need to know exactly why you are buying a flat.

Is it for consumption or for rental,
Is it possible to do it on that specific property?

Villas on the other hand are great investments since you own the land as well as a residential unit. But they come at higher ticket prices.
The bottom line here is that all of these properties have their own pros and cons.
But more likely than not, only some of them will make sense to you.
Your focus is not just high yield, it's feasibility and finding an option that makes sense to you.

But that’s not the end, once you figure out which type of property you want to go for.

You need to dive deeper into:

And those are just some of the steps.


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