Navigating new answers to the real estate market in India can be quite a bumpy ride. And if this is your first-time buying an investment property chances are your first property investment was not a great experience for all the bad reasons.chances are your first property investment was not a great experience for all the bad reasons. However don’t lose heart, because you can make up for the loss now – with your second real estate investment.
In this blog, we’ve put together a comprehensive checklist that you must ensure to go through before closing the deal of your next property purchase.
So are you ready to make your next investment the best investment?
Your 7-point Checklist for Buying an Investment Property
Let’s dive in and look at the things to keep in mind before purchasing a real estate property from an investor’s perspective.
1. Are You Financially Ready?
You must know what you can afford. Consider the initial cost associated with the investment. The per-square-foot rate of a residential plot is considerably lower as compared to an independent house In addition, any potential expenses that arise following renovations, ongoing maintenance, insurance, taxes, etc.
Most importantly, consider your financing options and how any loan repayments would fit into your financial plan.
Considering all of these factors will certainly help you prevent financial distress.
2. Is the Property Good Enough?
Whether you’re looking to invest in a plot of a built-up house, you must conduct a thorough and comprehensive inspection of the property. Take a detailed look into the overall condition of the asset.
If it’s a house, check how old it is, and whether there are any damages or potential issues such as pest infestation, mould, leakages, etc. On the other hand, if it’s a residential plot, check its size and make sure that it is large enough to accommodate your desired construction plan while also leaving some open space.
You must also take the topography of the land into account including its soil quality and shape (ideally it should be flat and not slope) to avoid foundation problems or issues with landscaping.
3. Is the Location Fruitful in terms of ROI?
The location of your property will determine how profitable the deal is going to be in the long run. A great, thriving location means potentially high returns, and vice versa. Gone are the days when City centres used to be popular investment destinations. Today outskirts that feature great connectivity to the mainstream city have gained investor’s attention
So, look for places with strong growth potential, high rental demand, nearby amenities, transport links, schools, healthcare and educational facilities, among other desirables. Remember, a location that features all of this will experience a high capital appreciation in the upcoming years.
4. How Lucrative Can the Deal Be?
Investing in a property where expenses outweigh income, can be risky and difficult to maintain over time. You should, therefore, have a clear understanding of the profitability of investment property. If you’re planning to rent out the property, analyse the potential rental income, and occupancy rates, and compare them with your estimated expenses.
In contrast, if you’re investigating a residential plot, study whether the property has a potential for capital appreciation in both the short and long term.
Negative cash flow properties, where expenses outweigh income, can be risky and difficult to maintain for long.
5. Does Your Investment Strategy Align with The Market Trends?
It is important to understand the real estate trends of the location where you wish to invest. Find out the value of properties in the neighbourhood, rental rates, and overall real estate market situation.
Also, take some time in understanding whether the area has strong prospects in terms of infrastructural development soon. Doing so will help you gauge the viability of the investment and whether there is potential for good returns.
6. Is There an Easy Exit Point?
Many investors tend to pay the least attention to their exit (or disinvestment) strategies when buying a property. However, that’s the wrong approach. As an investor, whenever you consider buying a property, you must think about how and when you might sell it. Otherwise, you may end up buying an investment property which puts you in a tight spot when you are looking to sell it a few years down the line
7. Are There Any Legal Complications?
Ensuring all legal parameters are covered is a critical step in the process of purchasing a real estate property. This involves confirming that the property adheres to all legal obligations and standards, from having the appropriate building permits to proving there are no outstanding taxes.
It is also important to verify that the property is not involved in any ongoing legal disputes that could potentially thwart your investment. Ethical compliance in all these terms contributes to the legitimacy of your investment and safeguards you against unforeseen legal complications in the future.
Closing
Buying real estate as an investment should never be a rushed decision. Take your time to do extensive research, and planning and seek professional advice to ensure that your investment leads to profitable returns. Visit our website to learn more.