6 things to consider before making your first real estate investment

It is easy for an investor with no prior real estate experience to get carried away, but keep in mind this investment comes with certain risks.

real estate, real estate in India, Real Estate Investment Trusts, REITs, stable investment option, mutual funds, covid-19

Amidst this COVID-19 pandemic, experts say real estate has emerged as one of the safest investment options. From the last few years, many people prefer living on rent rather than making a long-term investment in homes.

However, due to the pandemic, investors have been looking at investing in real estate. Investment in real estate comes with the potential to grow in value over time, and the investment can also be utilized to earn regular rental income.

Having said that, it is easy for an investor with no prior real estate experience to get carried away, but keep in mind this investment comes with certain risks and you can also get into real estate investments that offer no returns. Hence, as a beginner, there are certain things that you need to keep in mind.

Things you need to ascertain beforehand, before investing in real estate:

1. Check for Real Estate Regulatory Authority (RERA) registration of the housing project. These are comparatively cheaper housing opportunities. Verify the RERA number and approvals online or through municipal authorities. However, before zeroing down compare monthly maintenance charges, amenities like security, social clubs), electricity supply, water charges, etc. You should also compare the market prices of other ready-to-move-in or under-construction projects, along with the brand value of the developer is also important for future valuation as well as the infrastructure of the building. Know that poor construction could cost you extra in the future.

2. Before you start looking out, establish a budget. Experts say, keep it within your loan re-payment capacity so that you do not hamper your essential needs. Brokers usually persuade new investors to spend more and speculate higher returns, however, keep it within your limits.

3. Have a long-term perspective, while choosing a location. For instance, if your investment is in a residential space, proximity to amenities like bus stops, malls, hospital, schools, should be looked at, as that will either benefit your family or increase your prospects of rental income. However, if you are investing in commercial spaces, proximity to airports, ports, warehouses, etc. will be beneficial. Experts suggest the location of a property is vital for the re-sale value that the investor will receive in the future.

4. Before you invest in real estate, be clear about what you want to do with the property – earn rental income, own use, or investment re-sale value. Having these points clear will help you judge a property better. Depending on your purposes, you need to calculate return on investment over the short or long-term.

5. For first time home buyers, there are attractive housing loan incentives offered by the government. House owners get interest rate benefits under the PM Awas Yojana. Additionally, there are tax benefits on home loan interest rate under Section 24 and on principal payment under Section 80C along with payments towards registration and stamp duty.

6. Again, compare interest rates and home loan features before deciding on the lender. The PMAY benefits are offered across all major banks. Enquire about the transfer of loan options, as you could transfer your loan if you get a cheaper interest rate at another bank in the future.

Source: Financial Express



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