A Beginner’s Guide to Investing in Real Estate
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12 April 2019 - 8:00, by , in NRI, No comments

Smart investments have the potential to change lives, providing us with sufficient funds to fulfil our dreams. In today’s time, most people have an investment portfolio comprising of a bouquet of investment products – stocks, gold, bonds, government schemes, etc., but the most underrated or ignored investments continues to be real estate. Considering the huge economic boom in most Indian cities, the average household income has risen giving us added incentives to invest for the future thus making real estate the ideal investment choice.

Real Estate and Its Importance

Battles have been fought over land for centuries, leaving no stone unturned in order to acquire priceless properties. The demand for land has remained unchanged over centuries with everyone having their eye on what is available. Investing in prime real estate can be a great investing move as it rarely ever loses its demand or value and can offer higher returns in comparison to other traditional investment options. Owning a home is everyone’s dream and fulfilling this dream gives you emotional satisfaction as well as monetary joy. Given the high demand and short supply of land in the cities across the country, purchasing even a small flat can offer returns in the form of rental incomes and/or capital appreciation while selling.

Points to Consider Before Investing in Real Estate

It is quite common for someone with no prior real estate experience to get carried away by the lure of promise of high profitability and end up investing in assets which offer low or no returns. It is important to understand the risks that come along with investing in real estate and the following should be kept in mind before spending any money.

  • Patience is Key- Buying a property is a time consuming affair with transactions taking a few days to complete a common practice. Promises of overnight completion by firms can result in faulty investment decisions. You may end up purchasing a property for a higher price than the value or purchase one which does not live up to your expectations. Also, there can be delay in project from the seller’s end that results in your investment not offering any returns for a certain period.
  • Thorough Research- It is critical to do a proper due diligence before deciding on a property. The wide variety of projects in the market can be confusing and hinders the decision of choosing the right fit. It is important to check the amenities on offer, the history of the construction company, the materials used, the area a property is located in to determine the returns you get on your investment. Failure to do proper research before buying could see you regret later, negating your investment.
  • Check the Papers- The property papers are perhaps the most important factor to consider especially for someone who is not well acquainted with the real estate industry to protect yourself from getting scammed into buying a property with fake papers. Buying a property without clear titles can lead to long drawn court cases or litigation’s, which essentially nullify the investment. All property papers should be checked by legal experts to authenticate them, for failure to do this could see you purchasing a property which could be mired in controversy. A number of times people sell properties below market rate, which must alert you, for such properties could have litigation’s or internal issues with the owner.
  • Market Rates- Most local governments provide a guidance to help investors know the real rate of a property. Knowing the market rate can help in tracking local trends ensuring you don’t get tricked in to paying higher amount than the actual value. Researching market rates and working out future developments will help in extrapolating the returns that can be expected in the future.
  • Calculate Your Finances– It is important to calculate the finances you have in order to ensure that you meet certain goals. While it is easy to get loans from banks, calculating the interest and other factors is crucial.
  • Consider The Risk Factor– Real estate investments are typically safer than other investments, but that doesn’t mean they are totally risk free. Legal hurdles and property disputes are extremely common in India and one should ensure that the property they are interested in is clear and minus the hassles.

Owning a property can be the smartest move given the changing dynamics of Indian Real Estate Sector, and keeping these simple points in mind can point a beginner towards the right path to investing in real estate.

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