Investment of any form is a way to earn money without a lot of hard work. It is like making money out of the money you put in. In India, people willingly invest in gold and property. Since dealing with property has become an expensive affair over the past decade, a lot of questions arise before investing in one.
A good investment at an early age holds the key to a secured future for you and the subsequent generations. A fixed asset in the form of property is definitely the safest bet, especially in India.
Buying a plot of land has become a very complicated affair, when bearing in mind the obvious corruption surrounding the deals, creating fake documents, insisting for half the payment in cash and also issues of disputed land sales included. Hence, one should explore the possibility of buying a residential or commercial property as a form of fixed investment.
Here we present a stepwise plan to answer all the “how” questions concerning your investment.
1) Set your financial priorities – Be its financial situation, other ongoing investments, owning your own home or any other expenses; one must have funds sorted prior to investing a huge amount in property. Ask yourself about the mode of payment, amount of personal or bank loans that you are willing to take or any other form of savings that you may need to put in it. For some, buying a property for future returns may also mean a lot of lifestyle modification and financial compromises for the next few years. Be sure if you are willing to undertake these before venturing into buying a property.
2) Carefully select the area – Whether you want your investment property to be close to home (so that you can safeguard it personally) or you want it in another town/city (as a second holiday home); the place becomes an important deciding factor. This will also impact property appraisal as every area has different potential and will affect the rental amount.
3) What is the property worth – A property’s worth is not just dependent on its price, but also the expected rise in coming years. Its value can also be determined by the rent amount that home renters are willing to pay.
4) Nearby Facilities –More amenities bring more value and higher the amount of rent. Today everyone looks for basic facilities like hospitals, schools, work areas, recreational centers and parks for a decent lifestyle. Transport and connectivity are also important aspects to be considered.
5) Infrastructure and furnishing – Depending on your need, you may want an unfurnished, semi or fully furnished home. Do a careful budget and return evaluation before deciding on these.
6)Compare prices with external and internal facilities – Always check for more options in different areas which offer more or less the same facilities. Sometimes, you may find a choice of your home for a more attractive price.
7)Rent or capital gain? – Buyers should consider whether they are looking at a long-term investment in form of rental gain or multiple purchases and capital gain. Rent will help you to earn a standard yet the stable amount of money for a very long duration but won’t help you buy another property. While buying and selling a home after a good appreciation will help you own multiple ones in the future.
8)Saturation – A market that is full of investors will affect your chances of good returns in terms of both, rental and capital gain. Do a lot of area research and plan to buy when the purchases are reduced. This will help you save a lot of money on the initial investment.
9) Target renters – A very important factor to consider is who do you want as your tenants. This will be a deciding factor in the ultimate choice you make. For example, buying a home near a university will attract a lot of students, however, they have a limited period of stay. Buying a home near employment hub is best suited for young professionals or those who have recently moved and started a family.
10) Rent vs Emi – How much of rent will you use in covering up the investment loan? How much of rent helps you with your monthly expenditure? Do your investment the returns on investment from the property? These questions will help you clarify how exactly you will use the money that you finally gain from your property investment.
So, choose wisely and question diligently. Buying can be both exciting and scary at the same time. Make sure you put in the least amount and aim to get the best possible returns when you buy your property.