Real estate is a tricky business. What matters, when investing in real estate, is one’s knowledge and the ability to apply it. But the question is, how to invest in real estate in India to gain profit without failure? Experts say, foreseeing the future and gauging the market’s trajectory helps in making the right decisions.
A recent development in the ‘how to start investing in real estate in India’ arena, is the interest that millennial’s have shown. According to Forbes, people aged 36 and younger are the largest group of individuals who have ventured into real estate investment, in the last four years.
Keeping a check on the basics of spending is a fundamental step. There are two different aspects to real estate investment, viz., pre and post-investment. From getting familiar with the know-how of the market and asking experts for insights, to making the best possible use of the property you own, the entire spectrum offers a multitude of learning.
Here are a few tips on how to invest in real estate in India, to make sure you have it all covered.
Gain insight into the market
When looking for properties to invest in, learn what the market has to offer. Compare the deals that you have, and try looking at both the pros and cons of every deal. Check the market price, and do not believe everything a real estate agent says. Do your own research, check if the properties have any pending taxes or are disputed by any chance. Answer all your ‘how to invest in real estate in India’ queries, and only then make a decision.
Don’t aim too high
A mistake most people do is speculating the returns on their investment. The best possible method to make money in the real estate business is by keeping a steady cash flow. A middle-class property gives the investor a risk coverage in case the property market takes a detour and lands in a pit.
Work according to your purpose
Acknowledge the ‘why’ of your real estate investment. If you intend to rent the property you have bought, keep simple and replaceable furnishings. If the purpose of your property is re-selling, keep a check on the other houses that have been favorites among the buyers, and replicate what they have.
Seek expert guidance
The market seems all gold till the time you enter and invest in it. Find an expert who can help you see the real picture. Make sure that you get an unbiased review by hiring someone who isn’t a part of the deal.
Decide on the budget
Establish the amount of money that you want to spend on the purchase as there are different types of real estate investment available. Keep a check on the budget, and make sure you don’t exceed it. Pick out what falls under your spending limit, and choose the one that offers the maximum of what you want. This is one of the tips to invest in real estate in India that is sure to take you a long way since it is an emerging market.
Keep emotions at bay
There will be times when you think about spending a little too much on a property you like. Do not let yourself loose when it comes to spending. Real estate agents will try and persuade you to see the brighter side of spending more. The only bright side, however, is that they earn a higher commission.
Don’t be too stringent with your demands
If you want a balcony, a separate staircase, a modular kitchen, a jacuzzi, or any such specific things, you’re likely to be disappointed with all the properties you come across. Until and unless it is a customized home, you cannot find all you want under one roof. Out of all the properties you see, select the one that fits perfectly in your budget, and offers the most of what you want. Don’t aim for a property that will fulfill all your demands.
Starting out small is a very intelligent decision. Pay attention to the mortgage amount that you will have to pay back. Keep it in the range that is possible for you to meet. Don’t over-estimate and go beyond your limit.
Know when to move out
Contrary to popular belief, real estate is not a money-making machine. The international market, performance of a country’s currency, and many more factors are associated with the prices of real estate. At times, when the profit margins start to fall, selling the property at a price lower than your expectation is still a good idea. A marginal profit is certainly more than a huge loss.
Learning to effectively invest in something is the first step toward building a profitable career and understanding how to invest in real estate in India. The realty market, which looks like a simple business model on the outside, is actually a dynamic system. Knowing the basics before the first investment, and then keeping an update of all the current trends, safeguards you from a bad investment and lower returns, while minimizing the risk at the same time.
Connect with people
Irrespective of the kind of business, connecting with people is a very important task. New investors should learn from the ones who are already in business and then pass on the knowledge to others who want to pursue a career in real estate.
Think twice about the location
Do not compare the location where you live with the ones that you’re considering to invest in. Market trends and various other factors have a major role in determining what will yield better returns.
Don’t stop at a marginal profit deal
The golden secret to growth is not waiting in the hopes of making a huge profit from one property itself. The possibility of your prediction about multiplying your money by five times on a property in the next 5 years might be wrong. As soon as you find the right buyer, sell the property and maintain steady cash flow.
Apply Kaizen to your earning methods
Kaizen is basically a Japanese technique signifying continuous improvement. Keep a small target and try increasing your income by it every month. For instance, if you set a five percent growth in your income every month as your goal, and you are earning Rs 20,000, the target growth every month will look like this:20000*(0.05*20000) = 21000
21000*(0.05*21000) = 22050
22050*(0.05*22050) = 23152Setting small targets like this will help you tremendously in increasing your growth graph.
Get rid of your debt
To become a successful real estate agent, it is crucial to have a clean slate when you start investing. Banks consider debt as a negative factor when you want to consider mortgage as your way into the real estate business. A very crucial factor when you want to learn how to invest in real estate in India, it should be given all due consideration.
Earn when you buy
Popular belief says that you buy a property and then you sell it to earn more. Wrong! A smart deal is where you learn to make a profit when investing in a property. Check the price that you will have to pay including the necessary repairs, and then see what you can sell it for. Profit-making is a primary step in real estate, not a secondary one.
The locality in which you buy a property decides the kind of response you get. Do some research, and select good neighborhoods with facilities nearby. This will attract more buyers and thus, the price of the property will be higher.
Keeping all this in check, only help you take the first step. There is more to money making in the realty business in India. Once you have bought a property and learned how to start investing in real estate in India, there are a few additional factors that need consideration to make the most of your purchase.
Managing your finances is a skill that is acquired over time. Alongside your business, your money will grow, and so will the responsibility. Make a note of all the money that goes into your investment, and all that you spend from time to time. Also, note the profit you make and the amount you re-invest in your business. A clear note of all these things will make you understand the growth you have achieved.
Screen your tenants
Knowing who you are renting your property to matters the most in this business. Check the tenants’ background, ask for a credit report, whether he or she has a criminal history and other things to make sure the house goes in the right hands.
Prepare yourself for the extras
With real estate investment, come to a lot of overheads. Be prepared for all the money you will have to put into renovation, upkeep, taxes and more.
Start investing in more houses
After the first purchase, get into the groove and search for more properties you can buy and rent. Research about the present rental prices and then screen your tenants. Also, keep making smaller deals that could furnish you with some side income and help you in covering overheads like repairs and more.
Real estate investment offers immense growth opportunities if done correctly. With an eye for detail, a regular update on the market, and the mentioned tips on how to invest in real estate in India, it is possible to make the most of what the market offers.