Investing in residential real estate tricky affair

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Sachin AroraReal estate is a good long-term investment option, generating significant returns after 6-8 years or more. This remains true for all kinds of real estate assets, whether as residential, commercial real estate land or new investments options like fractional ownership and real-estate investment trusts (REITs). Rental income, in addition to capital gains from sales proceeds, is another way of having handsome returns on your investment in real estate.

Investment decision in real estate is a big one, as it involves a considerable amount of money and long-term financial obligations in terms of loans. Unlike most other assets, real estate has a limited amount of liquidity. As a result, the investor must perform extensive research and inspections prior to making a purchase to ensure that no costly mistakes are made.

Once you’ve begun your search for the right property investment, here’s a checklist to keep in mind:

Location:

Location always is the most important and vital element to consider while looking for a property to invest in. It is crucial to comprehend the impending infrastructure development, the neighborhood, the actual property position in relation to the approach road, the view, and the surrounding region, as well as whether or not they’ll stay the same after you buy the property. A thorough examination and study of the location are required when considering a long-term investment.

Documentation and Ownership:

Unambiguous ownership titles, clear adherence to RERA and other government laws, finance eligibility, the builder’s background and reputation for quality buildings, electricity and water connectivity and supply, and so on are all important concerns. Be sure you have watertight documentation that is legally registered, with all due diligence, taxation, insurance, and stamp duty, among other things, when buying/investing in a property after being satisfied with all of the facts. These processes are required to check the authenticity and worth of ownership papers, despite the fact that they are time-consuming and costly.

Property valuation:

Property valuation is required for financing, investment analysis, insurance, and taxation during the purchasing process. Because insurance premiums, investment analysis, taxation, depreciation, and the property’s future development and returns are all based on it, it’s critical to think about the property’s worth. When drawing a valuation, consider an income approach if you want to earn rental income from it.  A cost appreciation approach should be followed, if you want to see a profit in the ROI of the new property when you want to sell it, or a basic comparative analysis based on the analysis of similar properties in the area with similar features and so on.

Amenities and features:

While some are under construction or completed properties promise to have amenities that will be added to or extended in the future, it is advisable to look at the entire property from a feature and amenity viewpoint to understand the comfort of living and the possible value if renting. Elevators and open places for children and the elderly are required, as are high-quality bathroom fixtures and safe electrical wiring. Even if the owner has no plans to use the property, a property in a desirable location with great amenities increases in value and returns almost instantly.

Appreciation potential:

This is the most crucial factor to consider while looking for a property to invest in. The potential for property appreciation varies depending on market circumstances and the rate of development in the area. Because it is a high-value, moderate-risk investment, long-term investment requires a guarantee of significant growth. Large-scale infrastructure development (for example, Mega Highways, Airports, Metros, and elevated connected corridors) or a planned commercial/business hub in the neighborhood can be important accelerators for property value.

Keeping the aforementioned considerations in mind, in the case of real estate, the buyer should continue with caution and be on the lookout for any red flags that might cost him money in the future. Real estate remains one of the finest investment possibilities in the country, particularly when investing in land and residential real estate that gains significantly over time.

The customers are conscious about the challenges with buying property but sometimes the circumstances are such that despite understanding all the factors they cannot do thorough research. In such cases, it is always recommended that you go to the consultants who can help you with checking all the formalities and provide you with the status report for the project you plan to invest in.