18 February, 2019 Financial & Technical
Is that a wise decision to invest in more than one property? For many people buying several houses may be a distant dream, but for those who can afford it, there are benefits of owning more than one house.
Is that a wise decision to invest in more than one property? For many people buying several houses may be a distant dream, but for those who can afford it, there are benefits of owning more than one house. Owning multiple houses is not an easy achievement but it can be a goal worth going for.
1. Diversification within the industry:
Although diversification of investment means investing in various instruments like shares, mutual funds, gold, real estate etc. However, diversification within the real estate sector can also be an intelligent decision. Every place has their local economy which influences everything including real estate. So even if one of your property is not appreciating, there might be another property that you own in another city which may have increased in value. You can observe the pattern in different real estate markets and buy and sell in a well-timed manner. Any loss suffered from any particular property transaction can be offset against the windfall earned from another property deal. Thus, diversification can allow you to build wealth faster.
2. Multiple options during the sale:
The idea behind investing in real estate is to liquidate it in the times of need. There may be occasions during the life of the investor when there may be a sudden requirement of money which is then met by liquidating an investment. Having multiple real estate investment gives us the option of liquidating the one which is giving us the maximum profit. For example, if a person urgently needs a significant amount of money and has no other option but to sell off his or her house, he doesn’t have a lot of bargaining power. On the other hand, if there are several properties in possession, he or she can shuffle around the options and liquidate the best deal only.
3. Retirement Planning
Buying multiple properties before retirement also ensures that you remain financially strong even after retirement. It is obvious that the owner would let out the properties on rent and earn a handsome rental income to meet the post retirement expenses and a decent lifestyle. So one of the biggest benefits of owning more than one house is that it makes retired life much simpler.
5. Investing using property income
People who own multiple properties can use their rental income to invest in different types of investment instruments. Thus, the rental income itself acts as a tool to enable the owner to hold a diverse portfolio of assets.
As an investment, homes have an aspirational value and that’s why their value generally appreciate over their usable period. We have seen apartment houses built years ago sold at multiple times their original value. So, buy a house and you are unlikely to lose money on its long term value. And that is why, when it comes to buying and owning houses, the more the merrier!