In India, real estate is considered one of the most promising and secure investment options. It offers a lower risk compared to other investments, yields better returns and provides diversification to your portfolio. Here are a few trends that are creating an impact on the real estate landscape.
In 2023, a higher percentage of real estate investments will be directed towards tier-II and tier-III cities.
Real estate is going digital, from home-buying processes to lease agreements and home loans.
The future real estate market in India will be characterised by a surge in demand and a limited supply, creating a seller’s market.
The real estate industry is growing at a steady rate of 25%, which is forecasted for the next 5 years, this sets the foundation to make it one of the fastest-growing industries in India (Source: Mordor Intelligence). With this in mind, if you’re considering real estate investments as a way to diversify and grow your portfolio and wealth, here are a few essential factors to keep in mind to make an informed and successful investment decision.
7 Factors To Keep in Mind Before Investing in Real Estate
One of the most critical factors in real estate investment is the location of the property. The old adage, “Location, location, location,” still holds true. A property’s value and potential for appreciation largely depend on its proximity to essential amenities, transportation hubs, schools, healthcare facilities, shopping centres, and job opportunities. Invest in areas with a history of stable or growing property values and a positive economic outlook.
2. Resale Value
It’s a common myth that the prices of real estate are always expected to increase. Resale value is what most buyers overlook often as they assume the resale value will be higher. Real estate is a long-term investment, and the market can fluctuate over time. Research the historical price trends of the area and consult with experts to gauge the property’s appreciation potential.
3. Stage of Development
There’s been a growing fascination with under-construction projects in remote areas. The main reason behind this is that these projects prove to be more cost-effective, promising higher ROI, and they also strictly adhere to fair trade practices as defined by RERA regulations.
Before investing in real estate companies, it’s essential to assess the reputation and track record of the developer. A reputable developer is more likely to complete the project on time and deliver on their promises. On the other hand, if you go for ready-to-move-in options, you get the advantage of immediate possession and tax benefits.
4. Real Estate Laws and Government Policies
Familiarise yourself with the real estate laws and government policies in the region where you plan to invest. The implementation of GST and RERA along with the post-Covid-19 market have increased interest in purchasing a home. Understanding these policies and regulations will help you make well-informed decisions and avoid legal complications.
5. Check the Documents
Before finalising any real estate investment, thoroughly check all the legal documents related to the property. This includes title deeds, land records, building approvals, and any pending litigations. Verifying the authenticity is essential to ensure that the property is free from encumbrances and legal disputes.
6. Consider Various Real Estate Investment Options
Real estate offers a variety of investment options, such as residential properties, commercial properties, rental properties, real estate investment trusts (REITs), and land. REITs are most often the preferred option because they are required to return 90% of their taxable income to shareholders every year. This means that investors can get attractive dividends and diversify their portfolios with real estate. Diversifying your portfolio can help you balance potential returns and mitigate risks. Publicly traded REITs offer more liquidity than other real estate investments.
7. Consult an Expert
Even if you’ve done extensive research, seeking advice from a real estate property management company or financial advisors can be invaluable. At Integrow, you can get in touch with an experienced professional who can provide insights, guide you through the complexities of real estate investment, and help you make well-informed decisions aligned with your financial goals.
What to Expect When You Begin?
Firstly, investing in real estate can be time-consuming, requiring thorough research, property inspections, and negotiations. It involves going through property management reports, financial statements and yearly reports for your accountant.
Secondly, significant funds or assets are needed to enter the market, whether it’s for purchasing a property outright or securing a down payment for a mortgage. This substantial financial commitment demands careful financial planning and risk assessment.
Lastly, the real estate market can be unpredictable, influenced by economic conditions, local trends, and unforeseen events. Having a long-term investment strategy can help navigate through these uncertainties.
You can choose to leverage the trends in the real estate industry to your advantage or let them pass you by. Investing in a real estate property management company can be a path to financial success and wealth building. Diversifying your investment options and seeking expert advice will equip you to make wise investment choices.