Investing in real estate is a popular choice, as it is one of the most lucrative businesses in India. However, while it has become a popular investment vehicle, buying and owning real estate is a lot more complicated than investing in equities and bonds especially because of its continuous changing trends post demonetization RERA and GST implementation. But there are plenty of perks in you do in a right way. So here is the compiled list of all the factors to keep in mind while investing in Real Estate.
Invest with a reputed developer
It is always a better option to invest with a developer who has a proven track record, even if you have to pay a premium for the Asset. This premium will pay itself back with timely delivery and a high quality construction. Not to forget the lack of sleepless nights!
Use RERA disclosures
Now that Real Estate Regulatory Act (RERA) is enforced in most States, study the disclosures to understand the costs of construction, timelines, existing sales in the building and other nuances of the Asset. The information will be able to tell you facts and also may throw up some questions which you can clarify before making the Investment.
Do not trust brokers or intermediaries who are not registered with the Project
Under the RERA guidelines all brokers need to be registered with the project in order to market the project. Brokers are also liable for the information they share with prospective clients, misleading clients have stringent penalties on brokers too.
Plan your finances
If you have made a decision to buy a house, integrate all your finances to check as to how much down payment you can make. The higher the down payment, the less your EMI will be and the eventual cost of the home as you will pay a lower cumulative interest on the asset.
Check your credit score
Check your credit score before you apply, so you do not receive any unpleasant surprises when you apply for the loan. The RBI has instructed that a person should get at least one base-level credit report free in a year. Ensure that all the dues are paid, in fact try and keep your expenses low for 10-12 months before the application of the loan.
Check the Common Area Maintenance (CAM) costs
New buildings with a lot of amenities have high Common Area Maintenance (CAM) bills per month. Please ensure you have accounted these costs along with the cost of paying your EMI once you have taken possession.
Beware of Deep Discounts or Creative financing options
If a developer is selling an asset at a deep discount to others in the micro market or is offering some creative financing options (low down payment, rest on possession type deals), please spend extra time in doing diligence on the Asset. Many projects today are under water and these schemes help the developer float for a little longer, not necessarily get out of water.
The Bottom Line
In the context of investment, real estate is traditionally considered as one of the best investments, because of the quality and the market that is highly competitive. It can be a significant counterbalance to other investment instruments as well as a source of income. Invest in the right place, in a right way.
– Sahil Vora, Founder and Director of SILA