Key Points to Remember while Buying a Property for Investment
Real estate is considered as one of the major playgrounds for investment in India. Having fluctuating dynamics and obvious chances of growth in terms of value, it is vital to be aware of the market before making the leap.
In the last decade, realty sector has gone through excellent growth and investors are ready to indulge in it despite the dynamic and complex characteristics. Expert investors recommend that to acquire good profits through investments in real estate, there is a need for detailed evaluation of the market, locations, choices and the pros & cons related to the options.
Important factors to analyze before buying a property:
The initial analysis should be about the purpose of investment in properties. The investor might need capital gains in the future or he/she might expect a regular income as monthly rentals. If the investor is looking for capital gains, then the investor should concentrate on developing areas with obvious appreciation in the future. For rental returns, the focus should be on areas with convenient access to all facilities.
The segment of the property:
The ideal property segment should also be identified beforehand. Different segments of properties for investment are residential properties, commercial & office spaces, retail properties and industrial properties. Each of them has their own characteristics with individual risk factors and budget constraints. Check these 5 Legal Documents to Ensure your Property is Clear
Location of the property:
Another vital aspect to analyze is the location of the property. For instance, an active real estate investor in Chennai, South India, says that he chose to buy one of the apartments for sale in Pallavaram, which has excellent infrastructure and easy access to amenities for better rental yield and also better appreciation in value.
The property should be close to railway station, markets, and bus stop with better connectivity and good civic infrastructure while looking for rental returns. Long terms investors looking for capital gains should focus on corridors and city suburbs that are booming.
Type of property:
In the residential sector, investors should opt between new and resold properties as well as completed ready to move in units and under construction units. Completed and ready to move in units has its own benefits like instant rental returns, no risk of delays, and service tax & VAT (Value Added Tax) savings. Under-construction units are cheaper and feature home loan tax benefits, but have the risk of changing according to the dynamics of the market.
For higher appreciation, plots are excellent investment options. They also assure instant possession, low capital cost and hassle-free transactions. With that in mind, the demerits are that there are no possibilities of tax gains, short-term profits and financial help from banks.
For the investor to enjoy good capital returns, he/she should purchase a property at the right price. The property should meet all the needs and it should be financially feasible for the investor to purchase. While cheap property locations are expected to undergo late appreciation, expensive properties in developed locations have low possibilities for appreciation in the future.
Choosing the right builder:
As an investor, proper research about the builder or developer is absolutely necessary before buying a property off them. But with the RERA in function, developers need to be compliant and registered under the authority with transparency, which is an added advantage to end users and investors.
For instance, in Chennai, there are registered builders under the authority with numerous plots, villas, and flats for sale in Tambaram, Kelambakkam, Padi, and other developing areas which are excellent options for both investment and rental returns.