Wednesday, 20 April 2016

5 Things to know if you are looking to Invest in Property

The Indian real estate market is expected to touch US$180 billion by 2020. The housing sector alone contributes 5-6% to the country's GDP, says a report published by the Indian Brand Equity Foundation in January 2016. The real estate sector is considered to be one of the most lucrative options when it comes to building a corpus. Ideally, you should buy property when the markets are down and sell when the markets are at their peak. However, to make the most of your investments, you must stay invested for about 7 to 10 years, if you plan to buy and hold. Other than directly investing in property, you can park your surplus money in this sector through REITs and real estate funds in India. The former is a fund that is traded in the stock market, while the latter is a mutual fund that only invests in the real estate sector.

Things You Must Do

Whether you are buying your first property or are a veteran, the rules of investing remain the same. Given below are some property investment tips that could prove useful when you consider investing in this sector.

  1. Get Rid of Your Credit Card and Personal Loan Debts: Both these types of debt come with higher interest rates than mortgage loans. They can significantly decrease your borrowing capacity. Decrease your credit card limit or if you don’t use your credit card, you might as well get them closed.
  2. Choose an Established Developer: You might be lured into buying a house by a new developer in town because of its low price. Don’t be fooled by low prices, go for an established developer, who has an impressive track record of successful projects in the city. Also, look at whether the previous projects were completed on time or not.

  3. Check All Documents: Go through all important documents yourself, such as the title deed, clearance given by government authorities, approval of the building plan, environmental clearances and commencement certificate. If you are buying property that is being resold, make sure that it is not mortgaged via a bank loan and does not have any property tax due.

  4. Shop Around for a Loan: You might be a loyal customer and go to one bank for all your financial needs. However, it is a good idea to shop around for a bank loan while buying property.

  5. Calculate Extra Cost: Apart from the cost of the house, insurance, maintenance, registration and stamp duty, additional costs may arise at any time. Make sure to calculate these extra costs and keep sufficient cash flow at least for one year from the time of possession.

To invest in real estate funds in India, you can consult your financial advisor. They will be able to advise you on the amount of money you should invest, taking various factors into consideration.

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