Drawing Wealth from Real Estate Investment
Nov 19, 2016 Real Estate News
There are certain points that you must bear in mind when you are investing in a property with the ulterior motive of creating wealth from it.
- You should pay special attention to the location where you are planning to buy a property. It should have a proper social infrastructure, good connectivity with other parts of the city, decent public transport facility and adequate economic activity necessary for growth and development.
- Not only the location but the plot area of your house or apartment should also be considered. It is not wise to buy the top floor of a multi-storeyed building because the floor rise charges are higher here.
- The property you are investing in should be on a non-agricultural land and it should be exclusively meant for residential developments.
- In order to play safe and get assured returns, invest in properties in tier-1 or tier-2 cities with property prices ranging between Rs.2,500 and Rs.5,000 per sq. ft. This way you can get protection against capital value erosion. Also remember that small plots are less pricey but reselling them is usually difficult.
- It is very important to understand the property cycle so that you can identify the best entry point. You must consider the leasehold titles issued by the government as well.
- You are expected to have a clear idea about the capital gain from the property and the amount of stamp duty that has to be paid.
- Pay special attention to the quality and design of construction. Also, check whether all the development plans and statutory approvals are in place.
- The reputation of the builder must be considered. The builder should have a good track record and sufficient finances to complete his project on time.
- Make a list of reliable legal firms that would carry out the due diligence on the property’s title because even the banks have a set number of home loan targets to achieve.
- The due date of delivery of the house should be explicitly discussed. The buyer can also charge a penalty if the property is not delivered on the expected date.
- Keep in mind that resale price for completed projects is lesser than the under construction ones.
- The investor must thoroughly understand the sale agreement and the transfer charges in case he wishes to sell the apartment during construction. The agreement value should also include amenities like parking etc. or at least should be made clear whether these have to be paid separately or not.
- Lastly, the investor should compare one prospective property with another, in terms of location, facilities and rates of carpet area.
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