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First, let’s learn some basics of Property investment
Property investment refers to the purchase, sale, ownership, rental of a property to earn profit/income.
- Purchase of house to generate rental income
- Resale of property to earn profit
Investment can be long-term as well as short-term depending on the person and the current market circumstances. Investors buy a property to endeavor profit in the future.
You can do a property investment individually, in a partnership, or in a group.
Also read Real estate investment like a pro.
Types of Property Investment
Commercial real estate
Commercial real estate is typically a property given on rent for the use of businesses such as factories, offices. Generally, the rents are higher for commercial property, and contracts are made for a longer period, giving stability of income. It is the responsibility of the tenant to take care of and maintain the property, as a landlord you just have to give the vacant land/plot.
Residential real estate
Residential real estate is any property that is used to lend rooms, homes. Residential property is a one-time investment, and then you can get monthly payments throughout your life. It is a safe option as compared to other investments. You can lend homes to families, couples, or single people. The property can be apartments, floors, or even villas.
Mixed-use is the type of property which are used for both commercial and residential purposes.
For example: In a three-story building, the ground floor is given on rent to a company as an office. This will be a commercial use of the building.
While the first and second floors of the building are given on rent to a family. This will be a residential use of the company.
Buying raw land requires good research work and deep knowledge of property investment. While buying raw land you need to check the area whether it is developed or developing, or will develop in the future. It is important to do your research because the growth of the land and your profit depends on your decision. Buying raw land usually requires a large capital to make the best out of your decision.
The crowdfunding concept is growing gradually in India. In crowdfunding large groups of people come together and contribute small amounts of money to invest in a company or a project. In return people usually get profit from the investment or shares in the company.
Starting crowdfunding is a strategic task, you need a proper marketing team.
If you want to invest in crowdfunding make sure the platform is real and not fake. There is also the uncertainty that crowdfunding would work. Only 2 out of 6 crowdfunding work.
REIT or real estate investment trust are companies that run and manages assets or income-generating real estates. REITs deal in apartments, hospitals, hotels, other real estate. REITs also invest in highly liquid shares. REITs are total return investments providing a higher rate of dividend.
You may also like to read Multifamily vs. Single Family Investment?
Things to keep in mind while doing property investment
Location is the most important factor while doing an investment. The location of the property decides whether the price of the property will fall or rise in the future.
For example- A place in Gurugram is currently underdeveloped but after 5 years, the location grows at a high pace. Malls, shops, apartments are built near the location. Hence, the prices rise. So, location is an important aspect of selecting a property.
Current market condition
The current market condition is another important aspect of selecting an investment. If the price of the property is more than the actual condition, it would be an unfavorable condition to buy but a favorable condition to sell. Hence, a little research work is required to understand the market.
Proper research is very crucial before buying or selling an investment. You can't go back in past afterward. So, make sure to do proper research and invest wisely.
Always follow the legal procedure while buying or selling a property investment. Always stay by the rules set by the government. Whether you are a sole owner or a partner owner make sure you fulfill all the criteria and requirements.
As Indians, it's our right to negotiate. So, negotiate according to the market prices and come on a mutually beneficial price. A little amount of discount will also be beneficial to the investor.
It is very important to analyze the risk involved in property investment. You have to decide is the investment worth the risk? Or any other investment would be a safer option.
Make sure you are ready to pay down payment for your property. Usually, you have to pay 10-15 percent of the total value of the property in advance.
Mistakes to avoid in property investing
Many times people become emotional and sensitive while purchasing or selling a property investment. It is one of the biggest mistakes to make. An investment should be made with the mind and not with emotions to study the market, surroundings.
Research is another mistake several people make. People just see the current situation of the property and do not analyze the future. The money is hidden in the future of the property.
While you are investing consider all the options available, analyze the property and then conclude investing in a particular property as it requires a large amount of capital.
Don't do blind trust in people who come along your way and give you pieces of advice. Don’t rely on word of mouth, do a property analysis and then conclude.
Don't keep your hopes too high. There is always uncertainty in the market. Though the investment will not give you profits right away, it takes time. Keep your approach realistic!!
Before investing make sure you have paid your loans like a student loan, house loan, car loan. It is recommended to stay debt-free before making a property investment.
Make sure you have enough money to invest. If you don’t have enough finances then you can seek a bank and clear all your formalities for loan application.
Property investment overall requires knowledge and skills which will result you in making profits and income. It just requires patience and time. Investing in property for beginners can be a bit difficult but keep on gaining knowledge and learning about the property because only this will make you earn money.
So, are you ready to make your property investment? Which property investment did you most like?
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