Here Are 5 Guidelines to Follow Before Investing in Residential Property

Posted on: Jan 12, 2022 | | Written by:

Here Are 5 Guidelines to Follow Before Investing in Residential Property

Published on January 12, 2022. EST READ TIME: 3 minutes

Whenever a person plans to invest in a residential property, they expect some profit in return. If you are planning to buy a property and want to get a good appreciation in rate, then it is advisable to do thorough research before investing. It is necessary to buy a home insurance policy even if you keep the house vacant for a long time after buying. You can opt for HDFC ERGO property insurance to safeguard your home structure/content from any unforeseen circumstance. Now let us look at the guidelines you need to follow before investing in a residential property.

Five Guidelines to Follow Before Investing in a Residential Property

1. Do Not Hurry! Take Your Time for Research

It is advisable for home buyers to check out and compare at least ten properties before their search takes shape. Do not fall into the trap of perks that have nothing to do with the value of a property. Steer clear of unethical brokers guided purely by the commission to make you buy an inappropriate property. Before investing in the property, check out its basic amenities, like plumbing, construction, and safe electrical connections. It is wise to weigh the pros and cons before acquiring the property than realizing it post-occupation.

2. Check RERA Registration

Before visiting any property site, check whether that developer has RERA registration or not. Also check, that the developer has uploaded details title, approvals, agreements, delivery dates, payment schedules, finish, etc., on RERA. This will help you get a good insight into the project before making a purchase decision.

3. Construction Approval

The buyer must scrutinize the building plan/layout plan sanctioned by the local municipal authorities. Apart from this, it is also advisable to check approvals issued by the regulatory authorities for providing infrastructure facilities, water, sewage, electricity, environmental clearance, fire safety approval, etc. You can also ask the developer to provide copies of NOCs issued from different departments, such as the Pollution Board, Environment Department, Sewage Board and Traffic and Coordination Department.

4. Location

When you are buying the property for investment purposes, location plays a vital role. The location where you plan to purchase the home should provide good return on your investment. It is advisable to buy the home near a prime location, closer to economic parks, educational institutes and recreational centres, as it will provide good appreciation to your property.

5. Check the total cost of investment

The total cost of the real estate investment can be much higher than what you expect. This is due to additional charges such as GST, registration, stamp duty, brokerage, furnishing, borrowing costs, and more. For example, in an under-construction property, you will need to pay GST at 5 per cent and 5-7 per cent on registration and stamp duty, depending on your state norms. For furnishing the house, you may require another 5 per cent. Besides, a bank will typically fund 75 per cent in a high-value loan or up to 90 per cent in a low-value loan. The rest down payment has to be done by the homebuyer. Therefore, in most cases, an investor for residential property needs to have 20-25 per cent of the budget ready as cash in hand.

Conclusion

Buying a home is definitely not an easy task. Homebuyers need to take proper advice from experts and do proper market research before investing their hard earned money. Be sure to acquire all necessary documents related to the purchase of the property. Also make sure all the relevant paperwork/official documents are updated with the new details. Due diligence is necessary when it comes to purchase of a residential property. After you get the possession of the property, it is advisable first to purchase home insurance to insure the structure of your property and safeguard it against flood, earthquakes, lightning or any other unwanted events.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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