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Important Factors to Consider Before Investing in Real Estate

By Sthitaprajnya Panigrahi

Investing in the real estate segment is one of the most preferred and safest option for long-term investments. Real estate contributes a fair share to the economy of our country and its GDP. Since recently there has been a robust growth in infrastructure development across numerous Indian cities, investing in real estate has emerged as a safest option. Real estate has recently opened up an array of investment opportunities for investors and also there are many advantages of real estate investment, but there are few important aspects that one should consider before investing in real estate. The decision to invest in real estate is a crucial aspect as it involves a substantial amount of money and one incorrect choice can cost the investor quite enormously. There are some important factors in real estate investments that one should keep in mind before taking any major decision, so that, the investor wouldn’t face any major loss.

Some of the important real estate investment tips are mentioned below.

Location of the Property

The location always plays an important role, if you are looking for a property for investment purposes. If you are thinking about long-term investment, as an investor, you must have the idea of how the area is anticipated to grow over the years. There will be few differences in terms of locality for the residential and commercial properties. Residential properties should be nearer to markets and amenities whereas commercial properties should be in proximity to warehouses and highways.

Valuation of the Property

For an investor, it is important to understand the valuation of the property as the base valuation determines the factors such as insurance premium, assessment, devaluation, and so on. Before investing in a particular property, it is important that you should understand your purpose of investment while determining its value. You could either be renting it or you are planning to sell the property. In accordance to the purpose, you can either take the income method or sales method to take the necessary decision and draw the valuation of the property.

Finances and Investment Goals

Before planning an investment in real estate, you should have a clarity about your budget and the purpose behind this particular investment. Occasionally, a deficiency of understanding can lead to erroneous decisions which in turn produces long-term financial suffering. Are you planning to use the property on your own or you will be renting it? Is this investment is good for a long-term or a short-one? Understand all these crucial aspects before closing a deal.

Background Check of the Property and Seller

A proper background of the seller as well as the property is absolutely important before investing. While checking background, you should emphasize a lot on location, cost, legal necessities, time of delivery in case of a new project, and so on. In terms of the background check of the seller, you should look into the individual/company details, financial statements, title documents, and so on.

Government Approvals

Before investing in a property, check for valid documentation such as, its registration document with RERA, proof of regular tax payments, approvals from local authorities and so on. Check whether all the provisions are being complied with because if you are not paying sufficient attention to these details, it could land you in legal troubles.

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