A Brief Guide To Investing In Real Estate

By BankBazaar | January 22, 2016

A Brief Guide To Investing In Real Estate

Ankur was working with an MNC as a manager. He was also a part time investor. His few small investments eventually turned into impressive amounts. Ankur decided that it was time to invest the entire amount into something BIG for BIGGER returns.

But his mind was buzzing with several questions. Where to invest? How to invest? What is the right time for a new investment?

His ambitions were high and he wanted higher returns. But Ankur did not have a high risk appetite and wanted to invest in something that was fail proof. All this led him to one destination: Real Estate. But is it really a good investment? How can one make the best of it?

Let’s give you a few investment tips on buying a new property.

Fundamental principle of investment:

  • Buying low and selling high is the fundamental of all investments. This also applies to the property market. In the post-recession world however, real estate values take time to appreciate.
  • Investing in new property could be highly profitable if the investment is made at the right place, at the right time and for the right property. So if you are looking for a property, remember to make an in depth study of the property. It is not as simple as clicking “Buy” on an online shopping website. 

Fundamental drivers of investment growth:

The fundamental principle of real investing in real estate can be fulfilled only if some fundamental drivers are taken into consideration. We’ll tell you what factors affect investment growth.

  • Present and future infrastructure
  • Commercialization or business opportunities in the area
  • Appreciation or depreciation of property prices
  • Government approval and recognition of area
  • Availability of utility services

Minimizing the closing costs

Closing costs are the charges payable at the end of the property transaction. The closure of the property transaction leads to closing charges. These are registration charges, lawyers fee, survey charges and brokerage charges for the real estate agent, among others.

Some more tips for you

  • Negotiation. When you are buying a property, you are at a negotiation table with your seller. Today’s market is a buyer’s market. Use this advantage to negotiate the various costs incurred while taking possession of both the property and its ownership. Ask your seller to compensate for the closing costs.
  • Purchase Prices. Your biggest saving would be your negotiation on the purchase price with the seller. You must also keep an eye on other costs, which a real estate developer may charge in the future as a development cost. Remember to always try and keep the brokerage cost low or negligible.
  • An Inexpensive Finance. Buying new property is always heavy on your pocket. As the investment amount is invariably big, most of us need to borrow money to fund it. Explore loan offers from different banks to find a finance option that suits your pocket.

Additional Reading: Everything You Must Know About Home Loan Eligibilty

Some precautions you should take

  • Inspecting the building will cost you a little but save you from future repairs. It is a must-do exercise, especially when the property is not a new construction. You should check for any leakages, cracks in walls and flooring, etc.
  • Investigate the Title of property, land records and get the approval of relevant authorities wherever required.
  • Ensure proper documentation and registration of the property and complete all legal formalities before paying up.

Be the early bird. Invest in the beginning.

If you are thinking of investing in property primarily for investment purposes, investing early is a good strategy. It’s a good idea to invest at the commencement of the project. On the completion of the project, there are good chances that the value of the property will increase. The basic rule of the property market is that the price is lower at the commencement of the project and appreciates on completion. However, in the event that there is a delay in the completion of the project,  your investment will be affected. In the property market, it’s all about timing.

Additional Reading: Why Investing in an Under-construction Property is a Good Idea

Before you go, there’s one more thing you need to do. Don’t forget to check out our exciting offers on Home Loans. We make comparing and applying for loans really easy!

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.

7 thoughts on “A Brief Guide To Investing In Real Estate

  1. Divakar

    Investing in real estate is one of the oldest forms of investment. One can invest in different properties like Residential Real Estate, Commercial Real Estate, Industrial Real Estate, Retail Real Estate, Mixed –use Real Estate. Most common one is Residential Real Estate, in which person own a property and rent it out to tenant. And, owner will be responsible for paying taxes and maintenance of property. Just like this other investment plans also worked. Even, there are some fundamentals before investing in property that how older the property is, tax rules on property investment etc. You should check all of the aspects before investing in real estate.

    Reply
    1. Team BankBazaar

      Hi Vasant,

      Thanks for your valuable feedback. Please keep reading our blog for more.

      Cheers!
      Team BankBazaar

      Reply
  2. Kalpesh

    Before investing in real estate we should have a research of the market then only we should invest. Thanks for sharing the blog it was helpful.

    Reply
    1. Team BankBazaar

      Hi Kalpesh, We appreciate your feedback. We’re glad you liked our article. Keep reading and writing in! Cheers, Team BankBazaar

      Reply
  3. Kalpesh

    Thanks for keeping the point it is informative. the points are clearly to be kept in mind. Keep sharing the blog

    Reply
    1. Team BankBazaar

      Hi Kalpesh, Thanks for writing in. Do check out our blog for more informative articles on personal finance. Cheers, Team BankBazaar

      Reply

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