Real Estate is always a great investment option. While you may have heard stories of quick resale garnering a much higher price making it to the news, rental income form the core of real estate investment value. That’s because historically there has been very little real price appreciation in houses. Renting generates a steady monthly income, like a classic dividend-paying utility stock. If your property appreciates in value then that should be only seen as an additional bonus to your constant income stream. But making a real estate investment into a residential or commercial property isn’t equivalent to a low cost index fund.
The first thing to remember is that real estate is a speculative market and it moves in cycles. There are many factors associated with it including finding the right property, dealing with tenants, maintenance of property and ensuring that the rental comes in every month. To ensure that you meet these goals scout out properties in localities that has a healthy rental community. Before you take the plunge, do your homework. Properties closer to the commercial district, newly developed areas, localities with high social infrastructure and from reputed builders generally tend to have a higher possibility of giving constant rental incomes. Rent needs to cover not just loan payments, taxes, insurance, and fees, but also a 20% cushion for repair and periods of vacancy. This has to be factored in before finalising your property to ensure you get a good ROI.
In cities like Bangalore and Pune that have a high appreciation as much as over 20-30% in certain areas. In Bangalore Nayandahalli, Hebbal and HSR Layout are the fastest growing areas. In Pune, Kalyani Nagar, Wakad, Charoli and Wagholi have shown great returns for investors. These investments have been mostly in residential properties and due to the proximity to the growing IT spaces, they have seen constant income from rentals and also property value appreciation in the last two years.
With the introduction of the RERA act, the cost is expected to go up due to compliance pressures. The market under correction is a good time to invest if you are able to cash in on good deals. Under-construction properties are a better investment bet than the finished properties. Even the adventurous investors should study the market carefully before diving into the housing market including the NRIs who are not allowed to purchase, receive or transfer by way of gift any immovable property without permission from the Reserve Bank of India
5 secrets to successful property investment in India
Today there has been a more careful investing mind set while approaching real estate. But the right kind of investment when you start out, should be small! Go for smaller apartments, shops or houses. That way you can also manage your money better and learn the game before moving up to higher investment properties.
Also read “Massive investment boost to Indian residential sector in 2017 – Investments in Indian realty stood at $1990 million 1H2017 out of which residential realty alone accounted for 54% ($1075 million) of the total investments”