3 Factors to consider before purchasing a home

Indians love the lure of real estate – be it buying our dream home or getting a property for investment purposes. To us, real estate is very tangible and concrete – not a bad sign really since real estate is one of the most booming markets in India with a goldmine of opportunities. However, most of us make bad real estate investment decisions. Why is that?

In a less than transparent sector where trust is hard to come by, decisions are shadowed by lack of information, dearth of reliable opinions, and the unfortunate prevalence of fraudulent practices in this business. So before you pick up a property, you have to do the due diligence right. And even before that you must be clear about what you want. For instance, are you buying it for your own use or will you be renting it out? Are you only considering how the property appreciates or are you looking at your personal convenience in living there? What you ultimately want, will greatly impact the decision parameters for purchase.

Let’s look at some of the top things to keep in mind while choosing a home for personal use versus for investment purpose.

  1. Type of Property

End-use: Consult your family to decide what kind of a property fits your requirement. Whether a villa, apartment, plot, or house is the best option for you and family, is a collective decision and the inputs will be based on your needs and future plans. 

Investment: When you treat your property as capital, always go for the ones currently in high demand. You will get your insights from interacting with people online and offline, consulting realty experts, and doing your research. For example, in small towns independent houses are still preferred, while apartments are more in demand in metros.

  1. Status of Construction

End-use: A critical aspect of choosing a home for your end-use is the stage of construction. For example, if you are living on rent it would be feasible to invest in a ready home than paying EMI for an under-construction property. Otherwise, it would be  added burden for a longer time frame.

Investment: If higher returns are your goal, then it’s sensible to start at the pre-launch or launch stage. You will end up paying less at the beginning, and there is scope of price appreciation. There is also a higher risk element in the under-construction stage due to possible delays and changes in project plans. 

  1. Surrounding Infrastructure

End-use: A home for end use is a space where you are looking to spend a long time. It’s good to take stock of infrastructure in the area before you buy. Good connectivity of roads, renowned schools, and popular recreational spots closer to your home will help you sail smoothly once you move in.

 Investment: A property for investment might not sit in the best circle of social and physical infrastructure, but it’s important to look at the growth potential of the area. If a particular locality is a part of a city’s development charter, the government will introduce plans to ramp up the infrastructure. Prior to investment, it’s good to have information on these aspects.

Purchasing a real estate asset should be a guided and structured process with well-defined objectives and through idea of exact requirements. Having your reasons strongly in place will help you plan and invest wisely, and these parameters will help you differentiate the approach in both cases.

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