Real Estate has traditionally been a powerful source of wealth creation across populations. People who have lived through economic crises and pandemic slowdowns would understand that real estate creates wealth more consistently than any other asset class.  It is majorly due to rental income, capital gains and future value that a property generates over time. 

Having said that, it is imperative to understand that real estate is not a way to make money or get rich quickly. However, one can generate wealth and witness growth gradually with correct safe investment decisions. Real estate creates wealth through two highly effective ways rental income and capital gains. If the investment decision is sound, real estate becomes an excellent way of wealth accumulation. 

Rental income
This is one of the oldest and classic ways of making money through real estate. In this forward-moving world, people will always require space to live or work. Not everyone can take the risk of pouring money into a property altogether to enjoy rental income. However, those who do that can leverage the benefit of renting it out to commercial or residential clients. 

There are several options available to create a rental income. For instance, an investor can buy land, build it and rent it out. Apart from that, the investor can add variations to it by building it in a way that targets a particular segment of tenants. That land can also be converted into a commercial building to have a long-term tenant. On the other hand, buying land in a residential area and building it a villa or a home out of it can target tenants looking for a home to live. Both ways can help the investor create rental income which will vary depending on the type of the asset.

Capital gain

The majority of wealth generated in real estate is through the rising property prices, also known as appreciation. People make a massive amount of money only through appreciation. Even though the prices of property fluctuate, its real estate value always goes up, bringing capital gains for the investor. It is also essential to know that the appreciation can be realized only at the time of selling the property. However, investors can still increase their return on investment in several ways. 

One of the most obvious sources of appreciation is undeveloped land which an investor can purchase and develop. As cities start to expand, the land around them becomes significantly valuable. Thus, recognizing the potential of undeveloped land can help developers or investors leverage great benefits and enjoy capital gains. 

In the residential segment, location plays a crucial role in appreciating the value of a property. When the neighborhood or a residential locality evolves, the value of the property increases. Besides this, adding new road transits, schools, healthcare facilities, shopping centers and recreational zones for children also skyrocket the value of the property. As a result, this capital gain helps the investor to create wealth. 

Bottomline

Wealth creation in real estate can be realized through rental income as well as capital gains. It depends on the investor how safe investment decisions they make. RiseUp Holding – a leading real estate company in the UAE help investors make sound investment strategies that generate wealth for the generations to come. The company understands risks, market opportunities and other important factors in increasing the investor’s ROI and profits.

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