Guide to Investing in Real Estate: Important Things to Think About Before Investing

Real Estate Investing Guide: Crucial 10 Considerations to Take Into Account Before Making an Investment

There are many theories and advises from your neighbours or the experts in real estate domain that one should do the investments in property whether it is commercial or residential. But, there are crucial things one should always consider before making an investment or buying any property.

Today, we are highlighting few of the critical aspects which helps you to decide whether you investment in property is actually worth it or not. You can then effectively ask the question from yourself that the investment which you are going to do Today is actually going to give you expected results or not.

So, let’s discuss the points one by one to understand the economics of real estate industry.

1. Property Location–

As always said by experts that location is the key whether you are building you dream home or you are going to buy an office space or any SCO plots. So, the mantra saying that Location is critical and one of the major factor deciding your investment future is correct. We suggest all our customers to effectively research the location, their future growth options and the connectivity and then decide to buy. We have 100s of great location available in Delhi-NCR, Mumbai-Pune & Bangalore regions which can help you to take a wise decision. You can further reach to our experts for any suggestions required here.

2. Builder Valuation –The another important factor is how safe is your investment when you have finalized the location is the reputation of your builder and property project owner. Do a complete exercise about the history of the builder, its past completed projects, delivery of the delivered projects (check for any delay and the reasons for delay), list of upcoming and newly launched projects in the vicinity, criminal history and any violation of government norms by the builder. Once, you are full satisfied then only go for the investments because you can buy a property with little less price but if there is a bad history of developer your property can be in danger as well. We have a list of top rated builders with us to select from which are:-

DLF Builder– Listed and one of the prominent builder in India

Sobha Properties– Known for its quality in India as well across UAE.

Godrej Properties– Famous for his legacy and diversity in multiple businesses.

Puravankara Ltd– One of the popular builder in Bangalore, Pune & Mumbai locations.

Krisumi Corporation– Another A category builder in India with a proven records outside India as well and known for its solid work quality.

3. Property/Project Valuation –Once you are satisfied with your research over builder then the next step is to evaluate its properties and the project they are selling. If the property you are going to buy is Residential then one should consider things like:

a) Connectivity of the property to good schools, a market for daily use, city connectivity etc.

b) Development of the nearby locations.

c) No. of other residentials projects to a diameter of 5Kms or so.

d) Availability of government resources like electricity, water, sewerage and etc.

e) Internal amenities for your comfortable stay.

The same kind of research should go for your Commercial property like:

a) What are the numbers in terms of residential complexes in the vicinity of 5-8Kms radius.

b) What is the expected strength of customer living currently as well as in next five years.

c) Type of customers in current scenario, their buying habits etc.

d) Reachability to the main roads, availability of the vital resources.

4. Estimated ROI of the Property -

The return on investment (ROI) of real estate can be affected by a number of variables, such as the property's appreciation and when it will be offered for sale or rental. The duration required to establish your future plans. In order to make the optimal investment decision, you need also take your anticipated profit into account. Before making a new investment, many real estate investors use trustworthy resources to estimate potential costs and income for properties, even though it's not always possible to foresee what the market will bear in the future.

5. Budgets - Budgeting is one of the most crucial rule for real estate investing. Your current budget can assist you in determining the kind of property you can afford as well as in limiting your options in terms of location and space. You can determine whether you can afford a self-contained villa, a two-bedroom apartment, or a studio apartment by knowing your spending power or the adjustments which you can make to buy the dream house. The budget should also account for any unforeseen expenses that you may have to pay to banks, agencies, or even other expenses like furnishing, remodelling, or preparing a property for rental use. But, to make the finances an easy task for you, we have a team of Housing experts with us who can help us to take good decision with limited funds you have or the Home-Loan if you are looking with best available interest rates and quick disbursals. Do, let us know as we are just a call away.

6. Motive Behind Real Estate Investments – This question should actually should come any many intervals whether you are completely sure about the investment or if you are thinking for future investments.

a) Is your goal is a home where you and your family wants to stay then question is how much it will be sufficient looking at current family structure or are you planning keeping an horizon of 10-15years onwards- then go for a property which has less crowds, less traffic in Today’s date.

b) Are you investing you money Today to make a rental income- then go for a good SCO or commercial property which has a good residential properties close by.

c) Are you just want to rotate your funds for short time and want to take an early exit with short margins – advised to go with New Launch projects and take an exit after one or two price increments by the builder.

d) or you just want a land parcel in your kitty and will decide what to do on a later stage – then go for Plots or agricultural lands. So, in every scenario one should be clear with the goals and motive behind the investments.

7. Assessment of Liquidity– Liquidity in real estate industry is less as compare to other financial and different industries. In real estate, this can be a drawback (unlike stocks, which can be liquidated more quickly), but it can also work to your benefit because you won't be able to sell off your property whenever you want to, which means that bad news may spread and you'll still end up with your property. Given the size of real estate investing, money is a major consideration. There are several different financing alternatives when buying a home. Purchasing a property outright with own funds is one option. The investor would also be able to avoid paying interest on the loan.

8. Suggestions, Advise, Research –Like the location is the key, the same goes with your research and your connections. The more you discuss and query about the property or location or builder the more you will narrow down your doubts. That is why it has been advised to have a network is necessary and that too of the one who are regular with real estate investments, the brokers and real estate agents alongwith you should follow the industry experts to know what are they highlighting and follow their recommendations. When investing in real estate, things could go in the wrong direction, therefore it's a good idea to have contacts to stay out of problems and get out of a sticky position. Talk to as many successful investors (who made a good decision and got a good ROI) and unsuccessful investors (who didn't took a good decision at that time and resulted making less profits or no profit). You will definitely learn so many things and that will help you decide effectively for your future investments in property.

9. Financial Stability –it has been noticed in recent times that investments in real estate hardly goes in vein as we never heard that the property bought a decade back in not gave the expected profits. Even, properties are giving double the expected returns if kept for a good period like for 8-10 years and the return can go up to 10x of your cost beating all other investment returns. A large number of entrepreneurs and billionaires have made profitable real estate investments. It offers you steady financial stability. Your value would rise as a result of the long-term investment. If you have a monthly rental income from your investment or sell your property after years of keeping it, you will gain weight. So, if you are capable to afford the property (any type Residential or Commercial, big or small), will advise just go for it after your research and let it be in place for some time to take the maximum profit out of it or to make it your asset at later stage of your life.

10. Income & Tax Benefits- Apart from rental revenue, real estate's built-in tax advantages and long-term growth generate passive wealth. The tax advantages you might receive from real estate investments are yet another significant benefit. The price of depreciation, mortgage interest, operating expenses, repairs, and property taxes are all deductible for many investors. For investors, these amazing tax advantages are a great opportunity to save money and accumulate wealth. Taxes on upkeep, insurance, interest on a mortgage, and other expenses are deducted. Tax rates on real estate investments are lower than those on other types of investments. Naturally, different tax deductions apply based on the area, the type of property you own, and other tax-related circumstances. To maximize your real estate tax deductions, always seek advice from your tax expert on how to file your taxes.

Final Remarks

These ten suggestions above for why real estate is the greatest investment should be sufficient justification for you to diversify your funds and make real estate investments.

You may access equity, cash flow, and a physical asset that offers you control by investing in real estate, whether it's your first time or you want to grow your portfolio.