How to Invest in Real Estate like a Pro?

 Dearest Blog readers, this post follows our webinar conducted this week on ‘How to Invest in Real Estate like a Pro?’Mr. Feroze Khan, COO, Vakil Housing and Mr. Ramesh Kumar, DGM, Sales & Marketing, Vakil Housing who have a combined experience of over 3 decades in real estate have an intimate knowledge of the field. In our webinar the two gentlemen discussed the 7 cardinal rules of investing and demystified the process of generating profits from Real Estate investments.  Here’s a summary of what we discussed.

Why investing in real estate is a good plan?

Many of us are wary of investing in real estate; the obvious reason is that a huge chunk of money gets blocked. Real estate is not an idle investment; it is rather savings with potential for great returns. A few reasons why real estate investments should be considered:

• Ideal investment for medium to long terms
• Retirement plan
• Family benefits from your investments
• Shield against inflation
• Tax benefits
• Real estate investment is more stable in comparison other avenues of investments like shares, mutual funds etc.
• Gives enormous emotional satisfaction which is unique to real estate only.

Go on to read through the 7 cardinal aspects to invest like a Pro.

1.  Be clear on your purpose of investing

Why do you think you should consider the reason behind your investment? Because it will decide the course of action you take. Buying property for living, will need a completely different approach from buying a property for investment; where the former is a emotional decision, the latter is a rational one.

2. Invest young

Investing in real estate is not seen as a young person’s domain. We have seen our parents investing in property quite late in life and hence associate advanced age with real estate investments. However, things aren't the same anymore, securities today are more important than they have ever been. Additionally,

• Income increases, so the proportion of EMI as a % your income decreases
• Inflation makes the EMI value less and less significant
• Property values tend to go up
• With age, the home loan tenure might increase, resulting in increase in EMI.

3. Immerse yourself in  research

When researching about real estate no amount of information is enough, try to approach it from different angles. The more information you get, the better your chances of profitability.

• Look into Comprehensive Development Plan (CDP)
• For future development, eg. CDP 2015
• Zoning (Industrial, IT, BT, Agricultural, SEZs etc.)

Online

• Compare price points on portals- Refer to Magic Bricks for weekly Interviews
• For Blogs -Common Floor is a great avenue
• Watch out for Home Shikari’s location Heat map (to be launched)
• Subscribe to Newsletters from International Property Consultants for city trend updates

Offline

• Times Property, Deccan Realty, Address, Hindu Property Plus
• Visit properties in your vicinity: enquire about them. This spadework goes a long way in future investments

4. Do a quick fact check on builders

In our country, nothing is done without background checks. Marriages are performed only after verifications, then why not in real estate. With a fact check you will know if the builder has:

• Delivered on time in the past
• Post sales customer service
• Quality assurance
• Deviations from Sanction Plan
• OC and other legal sanctions
• Delivery of all amenities promised
• Operation of escalation clause

Try these different mediums:

• Google Search and online forums
• Completed projects (if any)
• Visit the builders previous project and check with the Owners, Residents and the Association

5. Invest within your limits

You are always looking for that perfect property and while adjusting for a little bit more, you may end up with a loan you cannot handle. So before investing you should ask yourself: How much risk is OK to take? Further, you should also consider taking home loan insurance? You need it because of:

• Protection from fatal eventualities
• Protection from job loss due to fatal diseases
• Protection against temporary  job loss for 3 EMIs*

*Conditions apply

6. Check the legal concerns

When it comes to the legal aspect take no chances, do not just go by the faith in the builder or your Banker’s. Consult a  specialist  property lawyer and seek clarity on:

• Clarity of title deeds
• Approvals in place
• Other legalities

7. Borrow judiciously

Always remember you are borrowing to invest so that you can return the capital with interest and still make some profit over it. Borrow an amount that you are comfortable with. Overburdening is not going to help.There are mainly three types of Lenders:

• Private sector banks
• Nationalised Banks
• Others home loan lenders

A few tips to get a loan you are confident about:

• Get a pre-approved loan
• Offer larger down payment
• Look for distress sales
• Check for the Pre-launch offers
• Remember to cash in on the fact that builders generally give a discount on the last week of the month or quarter
• You are likely to get better deals during Ashada / Aadi

An intelligent real estate investor will definitely consider these aspects and remember the best thing is that learning never stops. A first time investor goes through a turmoil, logical and emotional; hopefully this blogpost will help you avoid or mitigate it.