Real estate investment in India: Things you must know
Real estate business is one of the
most lucrative and exclusive businesses out there which can make huge returns
at a time or can give a constant flow of return. Though real estate business
requires high amount of capital and it also content bigger risk, still it is an
excellent investment sector.
One needs to keep in mind some specific things while investing in real estate especially in India. Real estate business in the country has really been booming over the years and it is high time for those interested in this sector, invest some good amounts. Followings are some essentials things to remember while investing on property in India.
Knowledge is the first condition
Before you jump onto the real
estate sector with a bag of money to invest, remember to acquire some real
knowledge on the local real estate sector. You might find tons of information
and tips in internet saying you what to do or what not, they won’t be of any
help if you don’t know ins and outs of your local market.
This doesn’t imply that all those
tips and strategies you find online are worthless. They are important to enrich
your knowledge. Most importantly, tips on internet will only give you some
gross directions. Walking on those directions with in depth knowledge is your
However, while you are collecting data on the local real estate market, you might find some specific upward and downward trends in the market. Don’t get daunted by those finding. Every real estate market goes through 4 crucial phases. Those phases continue cyclically. Let’s know about those phases.
- Recovery: Let us consider the
recovery phase the first of all. This phase is as the name implies, the
rebuilding phase of broken market. After the market goes down for quiet some
times, recovery phase begins and the market starts to recover from the wounds.
- Expansion: After a
significant period of time, when the market has totally recovered from its previous
negative phase, it once again bounces back and starts to get bigger.
- Hyper supply: This
situation occurs when a real estate market’s expansion reaches to its highest
limit. During this phase, supply and demand both skyrockets and properties
- Recession: After
significant period of hyper supply, a real estate market once again starts to
get feeble for overprice, vacancy and lack of demand. This period completes a
cycle of real estate market and another cycle starts with the recovery period.
These phases are usual as in a
particular geographic area, property and residential demand can’t always be the
same. Real estate market travels through different phases along with the change
is population, national economic health, political situation and many other
relevant factors. Better look out for the phases and take steps accordingly.
Tax law for real estate properties
frequently changes and one should be aware of the latest update always. Law
changes set higher tax or lower tax on property which should determine your
decision. A higher tax might prompt you to sell the property with a good price as
you don’t want to bear the burden on additional tax. Again, if you are a buyer,
you might opt for buying a property while the tax laws are relaxed.
This is perhaps the most important
factor to analyze before buying any property. If you are buying a property to
build a rental house or for the purpose of selling it for a higher price in
future, you must assess the growth potentials of the property.
How can you figure that out? Well,
look for the development works in the area of your property. An area with good
infrastructural condition, excellent transport system and big industries and
universities is sure to boom in future. Besides, you can also look out for the
information of future government plans focusing the area. If the government is
putting emphasis on development works in the area, confidently invest there.
Making long term plans
Fall in the property price in India is as rare as Halley comet in the sky. Well, if even the price of land falls in some place, don’t bother about that. It is sure to increase soon. While investing in properties, don’t make short-term plans. Always think big and go for long term plans. In India, property price usually increases by leaps and bounds. So, if you can hold your proper for a decent period of time, say 10 or 15 years, or even more, you can make several multiple of the capital you invested.