Thinking of investing in real estate? With a strong return through passive income, tax breaks, and equity gains, real estate makes a lucrative option to plunge in. Real estate has always been a smart investment option. With best return investments, surpassing stocks and bonds. But like every other business, real estate also has many risks associated with it such as losing your hard-earned money, if misguided. Thus, it is critical to do in-depth research and take extra measures before betting on this sector. Especially when you are a newbie in the world of investment properties, there is a lot to consider and a lot on the line too.
So, to help you to make a decision, we’ve put together this quick guide to the major factors that you need to consider before investing in your dream property.
Think about the objective of your investment
However obvious this may sound, one of the first steps you should take is to define the objective of your investment. And we are not only talking about the amount you want to invest but also the utility that you will give to the property and the type of property you plan to acquire.
Why do you want to acquire the property? You want to rent it out, resell it, or just live in it with your family? It is important that you should be aware of your purpose and why you are going to make the investment.
For example, if you are acquiring a house to live with your family, then it is more convenient for you to buy a house in a residential area with the best amenities for your family. But, if you are thinking of renting it, then the more convenient thing is to find an apartment in a tourist destination or in an area near universities or hospitals.
Who is selling?
An established real estate company offers greater security than a private individual who offers you property. It is important to have all the legal information and the certainty that you are investing in property with all regulations. Consider having the necessary legal advice in case of doing business with individuals.
Unfortunately, real estate investment has been a market where frauds have been presented in various modalities. So, take these alerts into account as not to be a victim of crime:
- An offer too good to be real. If they offer you great benefits within a short span of time it is a red signal. The most profitable real estate investments take time to start generating value.
- Suspicious ads with little contact information that is limited to a phone or Whatsapp.
- They do not offer you studies on the growth of the area
- You are asked to invest in “research expenses,” which are generally a scam.
An established real estate company, in addition to offering you all the legal certainty to validate your investment, allows you other benefits such as payment facilities or better terms. That is why it is sometimes advisable to have a real estate advisor.
Make sure that the investment property has legal certainty
Legal certainty is the evidence that demonstrates or accredits the legal ownership of the property. Whether a company or an individual, the owners of the property must prove the following aspects:
- That the land is registered under the RERA act.
- What is lien-free
- That is not offered as a guarantee
- That you are aware of all payments and taxes
In the same way, the individual or the real estate company must offer you with complete information about the property. After considering all these factors you should prepare for the investment.
Look at the surplus-value
Goodwill is perhaps one of the things that stand out most in real estate but do you know what it is?
In short, goodwill is the increase in the value of a property, that is, the monetary difference between the purchase price and the sale price, which increases over time. There are many factors that influence the increase in surplus value that does not depend on us such as Commercial spaces, developments, schools, hospitals, connectivity, etc. And as we mentioned in the previous point, the ability to see beyond how the area is currently is the key to making a good investment.
Detach yourself from the emotions while buying property
It happens many times we fall in love with the property by seeing the structure, appearance, and design. But, this approach is wrong because the decision should be taken logically or else it will affect your investment and return. Whatever is the intention behind the investment you should always think about it as a business. If you want to stay in that property, you will spend many years of your life in that house creating a lot of unforgettable memories. So, you should research the property, take the help of more experienced people in that field, and most importantly ask your agent the necessary questions to make the best decision by getting rid of your emotions.
It is a real estate investment, so think about the pros and cons. Negotiate with the real estate agent to see which payment method suits you best. So, before investing your money, you have to consider your budget and calculate your earnings and expenses before closing the deal.
