Whenever you make an investment decision, you should know the advantages and disadvantages. The real estate market requires a higher deployment of capital than any other class of investment like equity, debt, gold, mutual funds, ETF, etc. Therefore the investment will have your own capital plus borrowed capital like a bank loan etc.

Real estate market entails leveraged investment on account of the large investment required. Tax incentives alone should not be a consideration when investing. Hence, you cannot afford to go wrong in a real estate investment. Having said that, let us find out what are the negatives in this market.
The investment requires recurring and one-off payments. The one-off payment can be listed as, one-off deposit for an agreement to sell with the vendor and/or deposit to be paid to the society, legal fees for ascertaining the legal title of the seller, the processing and other fees of the bank/financial institution, the stamp duty and registration charges, electricity and water deposits etc.

The recurring payments are maintenance charges of the society or the caretaker's fees as the case may be, repair and maintenance charges, loan EMI, insurance and taxes, etc. Many of these are either lump sum, recurring or large outgoes. This impacts your return on investment.

Also, it is a balancing act to bridge the gap between the unexpected recurring costs, including rent-free periods on account of vacancy, and the expected recurring expenses. If there is a shortfall, it will have to be bridged from your other income. Hence, even if your net worth is great on paper, your standard of living may not be that great. Liquidity is basically how quickly and with least expense, you can turn your investment into cash.

Property investment scores least in this test. Even though you may get a good price, you need to wait till a good buyer comes along with the offer matching your expectations. The buyer also should be able to quickly pay the agreed price and not make you wait long. In such deals, the parties enter into a sale agreement and determine an upfront deposit.

The deal needs to be concluded within a mutually agreed time frame and if not concluded the deposit amount will be forfeited by the buyer. Since the intention is to sell, this does not give much comfort to the seller. The seller might also lose any other good deal that he may come across as he is bound to wait till the time specified in the agreement to sell.

The cost of sale can be time, legal fees and opportunity loss. Even if you hold the real estate investment for the long term you cannot escape the capital gains tax. At most, you will be entitled to indexation benefit. In equity investments (including equity mutual funds), there’s no tax on capital gains if the holding period exceeds one year.
In case of investments in equity/debt, you can set up risk management triggers like stop loss and quickly unwind your position. But in the case of real estate investments, it is very difficult to do so.