Real estate investment

 

why invest in real estate 

The primary reason it makes sense to invest in real estate is the assurance of positive growth. Capital appreciation means that the value of the property keeps increasing. And at the same time, rental yield also displays a positive trend. This dual effect of value growth and assured rent makes the real estate sector generate unparalleled returns, unlike any other asset. Since cities keep expanding and growing, they keep running out of space. This means that a property purchased in a prime location will give you attractive assured returns for a long period of time. 

But the risks involved in real estate purchases come from buying property without proper research or from a developer of disrepute. When purchasing property, make sure to check that the property has not been developed haphazardly and has been constructed following all municipal laws and approved plans. Real estate investments are also highly capital intensive and fairly illiquid.

how to invest in real estate 

The most common way to invest in real estate in Indiais to purchase a property. While doing so, the following points should be kept in mind:

1. Estimate Affordability:

   The first step is to identify your appetite for investment. The budget for purchase will have to be fixed depending upon one’s income and savings. Not only the property’s price, the statutory charges associated with property purchase including stamp duty, registration fee, brokerage, etc. will also have to be kept in mind

2. Apply for Home Loan:

   To avail a home loan, make sure your credit score is in the ideal range. This can be checked on CIBIL’s portal online. In addition to the credit score, banks will check a loan taker’s EMI paying capacity by scrutinizing their documents including a statement of assets, bank statements, income tax returns, and salary slips.

3. Choose Property:

   While deciding which property to purchase, it is good to keep the location, amenities, and size of the flat in mind. Good development will maintain a balance between open spaces and built-up areas. If the property is for rental purposes, check that the rental yield in the locality is sustainable. Properties that are closer to popular office spaces and commercial hubs are ideal. They should be well connected to public transportation and should have schools and hospitals in their vicinity. Other things to keep in mind are whether the home has been owned before or you are the first owner. Previously lived in homes will come with pre-fitted woodwork, fittings, broadband, etc. Although a lot of newer developments by respectable developers come with many of these facilities pre-installed in the flat including modular kitchens, video phones for main doors, and air conditioning. The property should have good open floor management and space should be designated well between hallways and rooms. If you own a vehicle, it is essential to have a designated parking space. Security in the complex should also be satisfactory. 

4. Reputation of Builder:

   Before purchasing the property make sure that the builder is a trusted name and can be relied upon to complete the project in the agreed-upon time frame. A good developer is one who delivers projects in a timely manner, follows municipal guidelines and building plans, uses quality materials and fittings in construction, and pays special attention to the architectural design.

5. Check Papers:

   The documents like title deed and registration papers have to be in order otherwise the property purchase will be null and void. It is a good idea to hire a real estate attorney who can look over these papers and make sure everything is in order. If the property has changed many hands, it is even more essential to check the papers properly to make sure no litigation is attached to any previous transactions on the property.

   know real estate where to invest and how to invest

   Real estate investment is profitable and gives assured returns over time but it comes with its own set of risks. There are many options available for investment in real estate in India. But a lot of thorough research needs to be done before you decide which option is right for you. Hopefully, the above article provides a brief overview of the pros and cons of the various options.

   How to Start Your Journey in Property Investment?

   Aspiring real estate investors usually think that this sector requires massive capital investments. However, quite interestingly, there are several ways in which one can invest in real estate to gain capital appreciation without having to own a physical property or take on the liability of its maintenance.

   There is a range of investment options that can give one the freedom to invest across diverse property sizes and locations with compelling returns. So, before you start property investment for long-term returns, read the section below to know the right options for investing in real estate in India. 

   1. Online Investment Platforms

   Online real estate platforms collect funds from investors and pool them to invest in opportunities on their behalf that would otherwise be too expensive to explore for beginners. Such online marketplaces list individual residential units besides a diverse set of immovable assets, so you can choose the property type that will best meet your purpose. 

   If you do not want to face the hassle of a landlord, start investing on online investment platforms. In this way, you can reap the benefits of owning finished projects. 

   Today you can select a reliable platform for a thorough cost-benefit analysis before drafting prospective real estate funds. Again, these applications provide customised suggestions to mitigate the risks involved and maintain transparent policies. Thus, you do not need to worry about any hidden costs. 

   2. Real Estate Investment Trusts (REITs)

   Investing in a Real Estate Investment Trust is best if you intend to invest in commercial properties. A REIT generates revenue from profits earned through equity and debt investments. As a retail investor, you receive a fraction of these profits as dividends. 

   REITs are the real game changers in the real estate investment industry. Their guidelines assure the shareholders that allocation of more than 80% of the value would be towards investment in revenue-generating projects. The rest may be allocated for investment in under-construction projects.  

   When you decide on making a commercial property investment, you can expect a minimum of 7-8% annual returns. This yield is considered appreciable by most small and mid-level investors who favour lower risk and long-term growth. Thus, if you desire to build an investment portfolio containing various properties by partially owning them, consider looking for the best-performing REITs.  

   3. Real Estate Mutual Funds

   Another great way of diversifying your investments is by investing in real estate mutual funds. Like normal mutual funds that include shares of several companies, real estate mutual funds predominantly invest in a pool of real estate stocks and REITs. Investors, however, cannot predict a fixed return as the earnings keep on varying depending on the following factors:

   • Demand and supply 
   • Current interest rates
   • Demographics, etc.

   If you are a new investor getting started with property investment,  you should consider real estate mutual funds as a viable option. Besides owning profitable real estate assets in key Indian metro cities, you will be able to ensure a stable annual cash flow as dividends. 

   4. Real Estate Wholesaling

   This option on our list can help people earn good fortune, provided they possess invaluable negotiation skills. 

   Many investors track daily news published by the local government regarding property rates. With such in-depth knowledge, you can easily predict which investment property is currently listed at an underpriced quote. 

   Based on your insights, purchase a real estate asset at an underpriced value and then sell it to an interested buyer at a higher price to secure a reasonable profit margin. Eventually, the end user might pay a higher price than the original property cost. The wholesaler must be able to extrapolate one’s returns to repeat this process successfully over and over again.