4 Essential Steps To Take While Investing In Residential Real Estate

  Author: Sanjay Sharma

4 Essential Steps To Take While Investing in Residential Real Estate

If one already has a home to live in, real estate investments can be a good investment option that can provide high returns over the long term i.e. 6-8 years or more. This is true for all kinds of real estate investments including residential and commercial real estate, besides land. Apart from capital gains from sales proceeds one can also enjoy rental income. Here, we will focus on one particular aspect of residential real estate, namely, the four important things one need to keep in mind while investing in residential real estate.

Focus on the locality of the project This is one of the first things you need to focus on in order to make a successful investment in residential property. Even in the same city, certain localities may command higher prices because of proximity to office areas, good transport facilities or other factors. In fact, something like a proposed metro railway project can considerably increase the price of a property in the near future.

Shortlist locations in the locality of your choice After you have zeroed down on the locality, choose the most promising locations. A property close to the main road will be more expensive and is likely to appreciate at a higher rate than one which is located in the interior of the locality.

Choose a developer with a good track record You need to check how the developer has performed in the past in terms of timely completion of his projects. The developer should have delivered on time for the projects of the scale you are considering. The is an important consideration since a project delay could mean you could lose money on the investment, instead of gaining from it, due to higher costs. So, do a thorough due diligence about the past track record of the developer.

Ideally, consider projects to be completed within six months Remember, any further delay will add to your cost of purchase since you would have typically taken a home loan to fund the investment and would be repaying it. Home loan interest payment is a major cost in residential property investments and determines when and how much you earn from the investment.

Investments in residential properties are quite popular with Indians thanks to the high returns they have typically provided in the past. But these returns can’t be taken for granted. To get the most out of such investments you need to keep these four things in mind when you get started.