Planning on investing in real estate? Here are important things you must consider.
Investing your savings in what could be your most valuable asset – your house, can leave you with many doubts. Hence, it is important for you to know the following key factors before you make a decision.
1. LIST YOUR NON-NEGOTIABLES
Before you seriously start looking for a house, consider your lifestyle and values. Make a complete list of non- negotiables like location, square footage, amenities, etc.
2. PLAN YOUR FINANCES RIGHT
Plan, fix and stick to your budget. In case you need funding, enquire about home loans that you are eligible for. Choose and secure your home loan and plan your repayments in advance.
3. LOOK FOR EXCELLENT CONNECTIVITY
Daily commute is a major factor to be considered when buying a house. Hence, look for a development that provides excellent connectivity and is located around hospitals, corporate parks, retail outlets, and malls.
4. BE CAREFUL WITH DOCUMENTATION WORK
Arrange, inspect and verify all your paperwork and documents before submitting and signing the agreement. It is preferred to have a lawyer run through all your documents before investing.
5. CONDUCT PROPER RESEARCH
Before making the big decision and investing in the project, conduct proper research. Seek advice from your friends and relatives, ask the society’s watchmen and existing residents about the project. This ensures you will get honest reviews.
Home Buyers’ Dilemma. Is Real estate a good investment option?
Past data shows that real estate as a pure investment play may not be a good idea. However, buying real estate for end use may reward in multiple ways.
The real estate sector has remained under pressure since 2011, with muted offtake and high inventories and builders would like to offload some of their stock. Government interventions like RERA implementation, GST and demonitisation have worsened things for developers, who are coming up with various offers and discounts to woo customers.
Overall Real Estate Sector Outlook
Though the sector has seen some positive movement in 2018, property prices are not moving up as much as investors would want. Property prices in the metros, which are taken as the benchmark for the overall health of the real estate sector, are still sluggish. In Delhi NCR, Mumbai and Pune the prices are in the negative territory.
Demand in the real estate sector has been muted on account and had been hit hard by the two major events – the enactment of Real Estate (Regulation and Development) Act or RERA in May 2016, and government’s move for demonetisation later that year. While the two moves are likely to benefit the sector in the long run, in the short term it will struggle to come out of its impact definitively.
Overall outlook for the sector is not positive in the near term. Rising interest rates system would be a negative for the real estate sector. Real estate doesn’t tend to do well during periods of high real rates (interest rates minus inflation). Demonetization and RERA have dealt a body blow to developers who were excessively leveraged. A supply glut in the residential real estate market is also likely to keep prices in check.
Case for buyers who are also end users
Buying real estate for end use may reward in multiple ways. If someone has been planning on buying his or her first home perhaps this is the right time to buy. Preference should be given to ready to move in house as against ongoing projects, which are scheduled to be delivered at a later state.
It is the perfect market for end users I have never seen such supply of ready to move in flats at such prices. The discount offers backed by cheap home loan makes the festive season a good time to buy a home. The offers during the festive period are fairly unique, competitive, one time and mostly customized to suit the target market. From a homebuyer’s perspective, this is one of the best periods to scout for their dream homes since these offers are annual. It is fairly encouraging to know RERA (Real Estate Regulatory Authority) and GST rate have made market sentiment positive, further boosting the confidence of the consumers.
Homebuyers shall proceed with caution and go only for RERA-registered developers with a good track record and opt for the best suitable financial payment plan and buy your dream home. Home loans at this time turns out to be a lot more attractive. At present, home loans are available at interest rates as low as 8.35% annum, which as it turns out, is among the cheapest in nearly a decade.
Case for Investors looking for good returns
For those looking to buy real estate as an investment, a detailed analysis is recommended. Investment advisers and personal finance experts feel that real estate as a pure investment play may not be a good idea at this juncture. Real Estate as an investment asset class does not make sense. There is a huge inventory build-up that needs to be cleared up first for the property prices to go up in a meaningful way. As an investor, one shall have a really long term horizon and the ability to select projects by developers with low leverage and a good record of timely delivery.