When it comes to investing, the resilient real estate sector has always been an investor’s favourite. The pandemic has made people realise even more the importance of having a property – to live or a property that gives regularised monthly returns as a way to supplement the existing income. It must also be noted that investment in real-estate is long-term and a big purchase which cannot be altered easily. The information asymmetry between what the buyer knows and what the market knows is higher than investment in other instruments. The risks that arise out of inexperience, misinformation or lack of information can increase the chances of damage or loss. To prevent damage or loss, it is important to do your own due diligence – read, research from multiple sources, talk to various people – locals, bankers, brokers etc. Investment can be rewarding but to make the deal a favourable one and risk-free, it is important to cautiously analyse key points before taking a final call.
Property location, sustainability and future prospects: Location is the most significant aspect while buying property. Connectivity and development of social and health infrastructures including schools, shops, hospitals, among others are important. Buyers should review the property through RERA website and employ a legal professional for transparent purchase. While investing in commercial properties, location of markets, warehouses, transport facilities, etc play a key role. As real-estate is a long-term investment, future prospects like environmental factors, sustainable practices, peaceful locality, safety, growth of nearby markets too hold importance.
Legal aspects: There are many legal regulations like tenant laws, registration procedures, restricted use of property, and others which are imposed by government bodies. Also, it is essential to investigate the title of the property through a reputed lawyer or legal firm. These factors become more important while doing secondary sales. Property-related legal issues are tedious and cost a huge sum of time and money so it is better to get all legal angles checked by a legal expert. You should also look out for any charges/unpaid dues which are often hidden in the property documents and sale agreements by the seller and broker.
Market sentiments and behaviour: A complete analysis of market sentiments and behaviours is must before making a heavy investment. Investors should check interest rates, offers and financial assistance provided by banks and governments. There are times when buyers and sellers are not present continuously in the market and under such circumstances, it becomes difficult to sell a property. In such circumstances, one has to under-sell the property or wait for a longer time, sometime up to a year for perfect price.
Calculation of expenses and profits: Investment in real estate includes lots of things from financing, investment analysis, insurance and taxes. Before taking huge debts for investing in property, investors must be aware of the magnified risks brought by debts. Every detail should be considered from calculating the cost to purchase and renovate the property along with operational costs. These calculations are necessary to be in the safe zone.