Real estate investment is considered the most preferred and safest long-term investment. The real estate sector contributes to around 7% of the economy of our country.
In the last decade, there has been robust growth in the infrastructure development of the cities in India. This development has opened up an array of investment opportunities in this sector.
According to industry reports, India is among the top 10 price-appreciating housing markets globally. In FY 2021, India registered a total real estate investment of $ 2.4 billion with a growth rate of 52% Year-on-Year.
The real estate industry is witnessing a surge in private investment in this sector that is driven by increasing transparency and returns. However, the decision to invest in the real estate sector involves a considerable amount of capital. One wrong decision can affect the investor dearly.
Therefore, investors should consider a few mandatory parameters before investing in the real estate sector.
Research about Property:
Doing proper research about a property before investing is very important. The research about the property should include the location of the property, whether the property fulfills the legal criteria and the background of the builder. Investors should check if markets and amenities are close to the property.
Whereas, proximity to warehouses, transport hubs, and highways should be checked for commercial properties. Investors should also check if they want to invest in an existing property or a new project. New construction projects might offer attractive prices but they may run the risk of delays. On the other hand, existing properties provide convenience and quick access.
Calculating your finances before doing any investment is important to ensure that you can meet certain goals. Investing in the real estate sector is very critical and requires detailed analysis. Therefore, investors must also analyze their expenses and profits beforehand. Also, it is not considered wise to give out liquid cash while investing in the real estate sector.
So, investors should look for a loan plan to invest in this segment. They should choose a loan option that provides the facility to split the credit, or offers the line-of-credit facility. The interest rate of home loans is around 6-7% which is very low.
Also, investors can avail of tax benefits of up to Rs. 1.5 lakhs on the principal payment while investing in a residential property. It will help investors in avoiding long-term financial distress.
Consider Valuation of Property:
When deciding to invest in the real estate sector, it is essential to understand the valuation of the property. The base valuation of a property determines various factors such as insurance premium, taxation, and depreciation. Many state governments provide a guidance value to help investors in finding the correct property rate.
Knowing the market rate of a real estate property helps in tracking the local trend and ensures that investors do not get scammed by paying a higher price. Lastly, property investment must be done in a location that is familiar to the investor. It will give them a clear understanding of the valuation of that particular property.
Check Documentations of the Property:
Another important step while investing in the real estate sector is to check documentation regarding government approvals. The respective state government orders for grants, sale deeds, wills, succession certification, etc to culminate the vesting of property with the seller.
Investors should check with property dealers if the project has been registered with RERA and if tax payments have been made on time. Many times people buy properties that are below market rate, which could be an alert for investors. Such properties could have litigation or internal conflicts with the owner. Investors should consult legal experts to check the authentication of the documents to avoid future issues with the dealer.
The market size of the real estate industry is estimated to reach $ 1 trillion by 2030. Real estate investment generates assured returns in the form of rent and capital appreciation. People prefer to invest in the real estate sector because of its capability to generate stable short-term income, in the form of monthly rents. Thus, buying a property can be the smartest step given the changing dynamics of the time. So, investors should keep these points in mind to take the right path toward real estate investment.