Eyeing Real Estate? Learn How To Make Your Investment Count Article

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Eyeing real estate? Learn how to make your investment count

An investment in property forms a part of the financial goal for almost every Indian family. While the timing could be different, the planning for property investment is an integral part of every individual, largely due to the value attached to it.

Author: Sia

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An investment in real estate has once again begun to turn priority for many due to the slight fall in property prices in recent times. In addition, the salaried professional is beginning to feel comfortable with long-term commitment as the fear of job loss has become a thing of the past. As a result, many are beginning to look at property as an investment option once again.

Whether you are acquiring property for your own use or for investment, an investor needs to keep a number of factors in mind. Here are some of those key points:

CHECK OUT LEGAL ASPECTS

Whether it is land or a flat, make sure to check the credentials of the property you are planning to buy. If you opt for a loan, the task gets a lot easier but it is not foolproof. For instance, there are reports of civic authorities razing down illegal constructions and in some cases, these properties were even financed by banks. Hence, it is worth investing in legal opinion even if it costs a few thousands of rupees.

PREPARE FOR LONG HAUL

While investors are enthusiastic about investing in property through financing at the time of acquisition, the same zeal disappears after a couple of years. In fact, many even consider the option of selling the property in a couple of years to get out of the home loan burden. In some cases, the investor settles for short term gains though in reality, the profits could be much lower after taking into account the cost of interest and time. Those looking at property investment through home loans should prepare for the discipline in servicing the loan for a minimum period of 10 years at least.

READY TO PAY MORE?

An investment in land may not escalate the cost, but an investment in property is sure to push up the price by an additional 10-15 per cent. This could be in the form of registration, interiors, repairs or even increase in the cost of property due to a hike in interest rate on your home loan. While a home loan taken during a peak interest rate cycle may not pose the challenge of a higher EMI in the near term, it is bound to prop up (the challenge of higher EMI) during some part of the loan repayment. Since interest rates too go through the cycle of volatility, chances of a higher EMI cannot be ruled out.

In the current environment, the probability of volatile interest rate is even higher. Hence, be mentally prepared for it.

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Eyeing real estate? Learn how to make your investment count