TIPS FOR THE RIGHT INVESTMENT IN PROPERTY
Real Estate has always been the most lucrative option of investors. But it’s important to understand the market trends and choose the right property to ensure maximum return on your investment.
In the last decade or so, Real Estate has witnessed tremendous growth. This is why people continue to attract to this sector despite the complex nature of property investment. Creating wealth through real estate investments requires careful analysis of the market, options, preferred locations and pros & cons of each. Choosing a property best suited for your needs is of extreme importance for making a profit in the realty market.
Some Key factors to keep in mind before selecting a property for investment are :
Purpose of Investment
Before setting out for search for a suitable property, one needs to ascertain his purpose for investment. Whether he wants regular rental income or he is more interested in long term capital gains? The preferred route for long term investors with great risk appetite, who tend to focus on developing locations opposed to those looking for rental income who prefer areas with easy access to basic amenities.
Most critical factor to consider while investing in real estate is the Location. Areas with sound infrastructure like those located near Railway Station, Metro Stations, Markets etc. will always yield higher returns in rentals or price appreciation. Investors looking for rental investments should go for areas that have good connectivity and social infrastructure, while long term investors are better off exploring emerging corridors and city peripheries that are likely to get infrastructural uplift in the near future.
Based on their risk appetite, budget and overall investment portfolio, investors need to figure out which segment is the right fit for them. Each of Residential, Office space, Industrial and retail properties have their own pros & cons, which must be carefully analyzed.
Choosing between under-construction and completed projects as well as new and resale properties has also to be seen by an Investor. While ready units come with benefits like zero risk of delays, immediate rental yields, saving on service tax and VAT which can amount to savings of up to six percent in most Indian states, Under-construction properties can be purchased at lower rates and enjoy tax benefits on Home Loans, but they carry substantial risks considering the dynamic nature of the market.
Plots are an attractive investment option owing to the scope of higher capital appreciation, immediate possession, lower costs and less hassles. Like any other asset, plots also have their disadvantages, the most notable being no tax gains, no financial from banks and no short term gains.
An intrinsic factor of investing in real estate in order to achieve attractive capital returns is buying at the right price. Investors should find out a property that meets their needs and still remains within their means. Most affordable locations are likely to witness delayed development. Areas that are already expensive have the lowest scope for future appreciation. However, cautious buyers are suggested to go for properties whose price tag falls between 2500-5000 per sq ft to be protected against price erosion.
Picking a wrong developer can be as disastrous as choosing a wrong location. Buyers therefore must carry out adequate research on the developer to ascertain their credibility and track record. With the real estate coming into force, developers have greater compliance requisites which will weed out fly-by-night and fraudulent developers. Short listing the best developers and projects are expected to be made easier for the buyers, with the enhanced transparency of the market.
To conclude, an Investor must conduct a thorough analysis before making an Investment and choose a project best suited to his plans and budget.