Do’s and Don’ts of Real Estate Investments

do-and-dont

Real Estate investment has always been a lucrative option. It attracts a lot of investors for building on wealth as it promises good returns. Real estate covers housing, retail, hospitality and commercial sector.

The decision to invest in real estate requires a careful analysis of the

  • economic conditions
  • investment policies 
  • availability of funds

People invest in real estate for various reasons like:

  • Stable income (rental)
  • High Returns
  • Portfolio Diversification

Like all other investments, e.g. stocks, shares, mutual funds, etc., real estate investment has its share of risks. The risks can be minimized by taking reasonable precautions beforehand.

Read more: Increasing Benefits of Real Estate Investment in India

There are some dos and don’ts which can help to take the decision prudently to invest in real estate: 

  • Investment in real estate takes time to generate income and is highly illiquid. It is essential to ensure that there is enough cash to survive the lock-in period. The property should not become a liability. One should have sufficient savings required to deal with hidden expenses like government dues, taxes, maintenance charges etc.
  • It requires careful planning to ensure availability of funds for real estate investment. Unlike other forms of investment like stocks and shares, the risk is more. There is much more to lose than the amount invested. 
  • It is advised to understand the property where one intends to invest. For example, it is good to know if the investment is fruitful in residential or commercial real estate. 
  • It is better to go for investment in various properties than to concentrate on a single one. A person can distribute the investment in multiple properties as per the budget. A mix of residential and commercial real estate is better if finances permit.
  • It is not uncommon to find that real estate investors prefer to take professional help and legal assistance as the amount involved is huge. It also helps to handle the risk appropriately. 
  • Do not expect quick returns in the real estate market. The benefits are reaped in the long term.
  • Miscalculations and myths are common in the property market. Always collect the information from reputed sources. It is better to approach the professionals or business analysts or financial advisers, who are well informed and knowledgeable about the property market. The expected change in the market price of the property has a lot of influence on the decision of investment.
  • Do not invest simultaneously in various properties unless there is sufficient backup. Cash flow is restricted once the money is invested in real estate. It is significant to be wise before we chose the properties. One should invest in the second property only when the first one has started generating income. 
  • Always talk to property dealers or regular investors if you are a novice in the field. Taking legal advice and professional assistance proves fruitful.

Read more: NRI investments in Indian real estate sector

Things to do when your home is not selling

Things to do when your home is not selling

A house is essential for a decent living. It is a part of “right to life”, a fundamental right. Investment in a house is made to create a permanent asset.

Investment in real estate is also a lucrative business option, more comfortable and predictable as compared to investment in stocks and shares.

House is put on sale for various reasons like:

  • Relocation
  • Speculative purposes
  • Financial necessity/Distress Sale

If the sale of the house is not getting any response, we advise our clients to consider certain factors as mentioned below: 

Pricing: setting the right price   

Setting the right price for home is very important and depends on the market rate. It is necessary to analyse price influencing factors such as the area where the property is situated, demand for the house whether for residential purpose or speculative investment etc. Accordingly, the price can be changed to attract the buyers and should be set to recover a reasonable amount. Reduction in price should be the last resort.

Time of sale:  Postpone the sale

There is a time when selling a house is more advantageous. It is when the demand for home is rising. Rising income, easy credit availability etc. are some factors which influence the demand for house. If the house is not selling, wait and watch the market movement. If the buyer has too many options, better to postpone the sale.

Try other alternatives: Lease or Rent

If the house is not selling, try other alternatives like offering the house on lease or rent. A tenant may be interested, and such a tenant who has a stake in the house will take good care of the property also.

Sometimes the buyers are not interested in immediate purchase as the arrangement of finance might be a problem. An offer of lease attracts such buyers as there is always an option to buy later. 

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Ensure that the sale of the house has been properly advertised to reach to the maximum number and photographs of the house show the best features.

Title of the house and updated government records:

Ensure that the house put on sale has manifestly clear title and is free from all encumbrances. This fact should be evident from the Government records which buyers do check before buying a property. The land where the house is located is not disputed.  Take care that in a housing society, the house is freehold and sale is permitted without hassles.

Incentive:

Try offering some incentive e.g. discount if payment made early or payment made in full at once. 

Repairs/ Renovation:

The house on sale must be in order beforehand.  Repairs, where ever required should be attended. If need be, parts of the house can be renovated to enhance the physical as well as the material value of the house.

Real Estate Agent

The real estate agent hired for selling the house needs to be changed. The sale may require new perspective and better professional skills. Real Estate Agent should not have any vested interest in the sale.

Relocation Companies:

In case of relocation for work, employers arrange for buyouts through relocation companies.  It can be of great help.

Legal Advice: It is always better to engage a lawyer for the brokerage contract, title search, knowing the tax implications and preparation of legal documents, in case of property related matters. Selling a home becomes smooth with right advice and strategy.

Why and where to invest in property in India

real estate investment

Real Estate investment has always been a lucrative option. It still attracts a lot of investors for building on wealth as it promises good returns. Real Estate covers:

  • Housing sector
  • Retail
  • Hospitality
  • Commercial

Indian Real Estate sector is also a good option for NRI investors as there is a lot of scope and potential for growth in a large number of Indian Cities.


Read: Increasing Benefits of Property Investment in India


There are many factors which influence Real Estate Investment Decisions:

  • Political Stability
  • Infrastructural growth
  • Connectivity of a place to airports and other major cities
  • Government Policies in General and Particular for the area – ease of business, transparency, speedy disposals of proposals etc.
  • Tax benefits
  • Quality of Life – Basic Amenities, Education and health facilities
  • High paying jobs – more beneficial for investment in the housing sector
  • Migration – Inflow of people
  • Prospects for future development
  • Emotional bonding with hometown – the special reason for many NRIs as they want to create an asset in their hometown to settle down after they come back to native place
  • Affordability

When it comes to choosing cities for Indian Real Estate Investment, Delhi, Mumbai, Chennai and Kolkata has always been a favourite. They have had their share of growth and development. There is saturation in the property market. The possibility of future growth is limited.  Now their periphery area is attracting investors, eg. Navi Mumbai.


Read: Investment Options for NRIs


Recently, the Tier II Indian cities are attracting real estate investment, as:

  • Government’s efforts: Indian Government’s Smart City projects under which they aim to develop Tier II cities by providing core infrastructural facilities, a decent quality of life and clean environment besides smart solutions. Economic decisions like GST and regulatory authority like RERA which has brought transparency and accountability are also boosting investment.
  • Property is available at affordable price and high Rental Income
  • Improving Infrastructure, health facilities and educational institutions
  • Migration

List of top most Indian Cities for Real Estate Investment with reasons:

  1. Bangalore – Infrastructure, Connectivity, IT sector induced demand
  2. Chennai –Rising demand due to fast-growing economy (manufacturing, health, automobile, technology sector), Affordable property rates and good rental rates.
  3. Mumbai – areas like Thane and Navi Mumbai enjoy proximity to Mumbai, Employment Opportunities, and demand for residential accommodations.
  4. Pune- Lot of migrants in the IT sector has drawn steady demand for further investment
  5. Hyderabad – Presence of IT employees raises demand in housing and retail sector, Connectivity to Airport and State Government facilities for investors
  6. Kochi – Government’s initiatives like single window clearance, discounts to NRIs for investing, better infrastructure, educational Institutions drawing migrants, all are leading to property sector growth.
  7. Ahmedabad – Employment Opportunities, Improved Infrastructure, demand for houses, Transparent and easy procedures
  8. Bhiwadi – City is catching up for Investment. Proximity to Gurgaon and International Airport, IT sector presence, Affordable prices, Infrastructure are an advantage.
  9. Thiruvananthapuram – Growing IT sector, City’s tourism potential, Infrastructure, Healthy Lifestyle.
  10. Coimbatore- City is close to many tourist destinations, upcoming infrastructural facilities, growing service sector including IT firms, Flourishing manufacturing and retail industries.

Read: Government Initiatives and NRI Investments in India


In case of NRIs, besides, the monetary reasons, emotional connection with their hometown for settling down in the future is also a major factor which drives their real estate investment decisions.

Indian Real Estate holds a lot of promises for good returns on investment.

Reasons for Investing in Indian Real Estate

Reasons for Investing in Indian Real Estate

A few decades ago, investing in real estate was a luxury, a way of boasting their social standing and not a necessity. But today, in this era of globalization investing your money in property is not merely imperative but also one of the most tried-and-tested ways to grow that money over the coming years. Following are a few reasons as to how investing money in the realty business is one of the safest bets for NRIs (Non – Resident Indians):

  • Stay Connected, stay rooted: No matter how much one loves living abroad, having a house back home in one’s own country gives a sense of belonging. Moreover, wherever you stay, at some point you are sure to say ‘Take me home’ country roads.
  • Rent Benefits: Having an extra property in India, would pose as an additional source for your income. Even though NRIs have to pay tax on the rental income, a part of it gets compensated under Section 80 (C).
  • Retirement Benefits: Senior citizens who own property in the country get benefits of Reverse Mortgage, i.e. money taken from the bank towards this Mortgage is not considered as a part of the income of the NRI.
  • Price Benefits: Along with the emotional connect and the benefits of rent, affordability of properties is yet another reason of why investing in real estate is lucrative for NRIs.
  • Long-Term Returns: The real estate industry has observed tremendous growth in the last decade or so and is further expected to rise by 10-15% per annum.
  • Controlled Asset: While in order to invest in shares and stocks you might require a broker, real estate investments are simple enough to be done on your own, especially with the various portals available for property purchase and sales such as Makaan.com and 99acres.com. These websites provide all the required information such as the localities and any and every query can be answered.
  • Ample Finance Options: From banks to the various Financial Companies along with numerous private lenders, there is truly no dearth of money in this business.
  • Pass onto next generation: Real estate properties can be passed onto the next generation, this is one such investment which will continue to grow and prosper. No other company or National Stock Exchange has topped the market in a row during the last decade.

Thus, investing in real estate would turn out to be the fruitful endeavour, which would not only benefit you but also your children and the coming generations.