by Anushree Ghosh,
Things to consider before investing in a property
Investing in real estate is considered one of the safest and profitable avenues. In India, the real estate market is estimated to grow at tremendous speed and is expected to produce about 60% of jobs in the coming years. With the latest economic reforms like RERA and GST, we expect more investors opting for real estate deals. Accessibility to easy loans from banks, exemption from the taxes, and the increased average income of the middle-class families have also resulted in more transactions in the sector. An intelligent investment can lead to lifelong returns, and you can then enjoy life without being bothered about day-to-day cash flow. While this is a lucrative investment, one wrong decision can lead to huge losses.
Here are a few things to consider before making an investment in the sector:
Thorough Research: While searching for a property, you need to look for several other factors other than the location. Not doing so can lead to no returns at all. It is important to know about the developer’s history, nearby facilities, the rate of appreciation, market value of the rental returns, mode of public transport available near the locality, resale value, etc. Every information you gather will help you to take the right decision.
Take time before you decide to invest: Take your own time to decide, after analysing the pros and cons of investing in different properties. Even if you instantly fall in love with a particular property, you must keep looking till all your requirements are taken care of.
Learn the basics: It is not rocket science but you need to be patient if you are investing for the first time. Go through all the checkpoints, there may be a hidden cost that you need to spot before making the deal.
Underestimating your investment power: Thinking that real estate is only for the wealthy and not considering all the options is like running away before even knowing the plans. Here are a few things you need to know in order to analyse your financial feasibility.
- Annual Income
- Monthly expenses
- Operating income
- Total return
- Initial capital required
- Taxes, repairs and utilities
Setting up a goal: Your goal must be clear in your head. Do the calculations about the immediate capital required, the long-term financial requirement and the return you are expecting. To set up your goal, consider the other factors such as your age, income, cash-flow every month. For instance, if you are living a retired life, then you may not consider a long-term investment plan.
Keep your back-up ready: Be ready with different plans if you want to sell it in two years, then be ready with plan b if it doesn’t sell, then you can rent it out or do something else with the property.
Believe in Reality: Real estate looks like a great investment opportunity but you cannot get rich overnight. You need to be patient and deal with the property cleverly to get maximum return.