5 Points To Consider For Your First Real Estate Investment In India

Real Estate is one of the significant assets you will own in your life. Experts are of the view that asset building cannot be complete without owning property. Apart from the potential to grow in value over time, real estate can be utilised to earn regular rental income.

Upon complete ownership, you can also seek substantial loans against your property.

While there are several benefits of investing in real estate in India, you need to ascertain certain aspects beforehand.

1. Housing project

Growing urban population in India has resulted in a surge of new clusters of homes and commercial spaces in the suburban areas of large Indian cities. These are cleaner, comparatively peaceful and cheaper housing opportunities that still allow you access to the city of your employment. Choices they offer are lucrative, however, its not wise to invest without some due diligence.

Check for Real Estate Regulatory Authority (RERA) registration of the housing project. Verify the RERA number and approvals online or through municipal authorities.

Compare market prices of other ready-to-move-in or under-construction projects close by.

You may also compare monthly maintenance charges, amenities (like security, social clubs, play area, gym, park, etc.), electricity supply and water charges.

Brand value of the developer is also important for future valuation as well as the infrastructure of the building. Poor construction could cost you extra in repairs towards leakage and other physical damages.

Check the builder's reputation for infrastructural needs like quality bathroom fittings, safe electrical wiring, parking space, etc.

If you buying a previously owned house, check the titles of ownership in the documentation.

2. Location

Look at the location with a long-term perspective. If it is a residential space, proximity to amenities like hospital, schools, malls, bus stops will be beneficial for your family or increase prospects of rental income. For commercial spaces, proximity to warehouses, airports, port, etc will help.

You may also want to re-consider the aesthetic appeal of the house you pick. For example, the view of agricultural land outside the window may look appealing at present but there is a possibility that another residential or commercial building will be constructed in a few years and block it. The peaceful open environment could become a noisy manufacturing facility.

Location is also vital for the re-sale value that you will receive in the future.

3. Reason

Before you make the purchase, it is wise to constantly question your intentions behind the purchase. Are you looking to earn rental income? Is it a passive investment for resale value? Is it for your own use?

The constant "why" will help you judge the property better with or without a broker's help.

If it is for resale purposes, you may want to check historic price trends of the houses in the area and calculate return on investment over the short or long-term.

4. Taxes and liabilities

The Indian government has attractive housing loan incentives for first time home buyers. Apart from interest rate benefits under the PM Awas Yojana (especially in the budget home categories), there are tax benefits on home loan interest rate (Section 24) and principal payment (Section 80C) along with payments towards registration and stamp duty.

As for your developer, before you sign any documents related to the purchase of a house, make sure you read the fine print on the liabilities of the developer. If you sign without asking the right questions, the builder cannot be later held accountable for any shortcomings.

Similarly, you may want to compare interest rates and home loan features before you decide on the lender. The PMAY benefits are across all major banks. You may also want to enquire on the transfer of loan options, for a time when you get a cheaper interest rate at another bank in the future.

5. Budget

Establish a budget before you start looking for properties. It should ideally be within your loan re-payment capacity without hampering your essential needs. A broker or agent may persuade you to spend more and make speculations of higher returns, however, it cannot outweigh the damage from defaulting on your home loan re-payment.

You may not get everything you wanted from your house- like a certain bathroom shower setting or a modular kitchen. You will have to spend on re-modelling the house, which will require additional funds. So it is wise to stay within a budget and pick a house that meets most of your demand while allowing you to make changes in the future.