Things to keep in mind while investing in property.
Real estate investment has been an associated part of an investor’s portfolio. However, buying a piece of property is not an easy decision generally has to calculate many factors including appreciation value, investment benefits, builder status, legal hassles, mortgage, etc. Properties arrive in different forms, like affordable housing, semi-luxury and Luxury homes. In today’s current market situation, there are five factors which homebuyers should focus on before investing in on any property.
Location is the biggest appreciation factor while buying a property and therefore should consider this utmost. The quality of the location will establish the value of the property in future. Thus, the existing and upcoming infrastructure in a recognized area can have a positive impact on the value of the property. Also, a proper analysis of the demand drivers is of the essence to understand the investment potential in the neighborhood. Factors such as commercial complexes, metro connectivity, hospital and proximity to markets can have a cascading effect on the property. Therefore, the buyer should have a clear idea of the location and in-depth understanding of the appreciation dynamics before investing in the property. The buyer should not choose an area with no infrastructure and connectivity.
Financial capacity & Time to Invest:
While the current market scenario presents an opportune time for the buyer to buy the property considering the fact the residential properties are at the lowest point and developers are also offering various schemes and payment plans which are usually witnessed during the festive period. Apart from this, the buyer should also ascertain how the basic sales price of the property is derived along with the additional cost attached to the property in order to calculate the home loan and EMI that the buyer has to pay for the next few years. Therefore, one should be aware of the final purchase price of the property and not just the basic cost of the property prior to availing a home loan.
Trustworthiness of the developer:
Choosing a right developer with credit history has become an important criteria for property investment as delay in delivery will hamper one’s investment. Good quality of the project and final delivery attract clients towards the product. One should invest in property marketed by reputed developers as such builders do preserve their reputation in the market as compared to fly-by-night developers who make tall promises and do not deliver the project on time. Additionally, reputed developers help in creating higher valuation of the property and try to improvise their product to deliver higher value to the customer for future re-investment.
Today, buyers are not looking for a house but they also need proper amenities such as club, swimming pool, security measures, power back-up and other benefits. One should invest in property where he/she can create his circle of friends or like-minded neighborhood and the family can enjoy every single recreation activity within his condominium and do not have to move out to avail such services.
Rental returns in India are less than 1%, but at certain prime locations they account to more than 1.5%. Going forward, this will be an important aspect for the buyer to be considered while making a property investment decision. Most of the investment happening in international residential market takes place due to higher rental yield compared to India. For instance, if there is higher demand for a particular property, the rental yield of the property will always be higher as compared to other properties in the same location.