buying real estate property

5 thing to know before buying real estate property

5 thing to know before buying real estate property

Life is all about experiences. 5 thing to know before buying real estate property. And these experiences carry excitement as well as a particular level of anxiety. Your first day at school, your first day out of your town, your first day at a job and, in the same way, your first investment either it is in stocks or in real estate sector, each one lets you to experience a new kind of excitement.

Investing in real estate is always a big decision. That’s why such investment decision are hard to take. It is a daunting experience as there is no ‘let’s go back for a refund’ rule. That’s why many people find it hard to gather the courage for investing in the realty sector. They are clueless about the criteria’s of investing in the realty sector. Interestingly, many know about the risks associated with the investment in realty sector, but they are hardly well aware of the opportunities offered in this sector. For example, the lucrative advantage over investment in realty sector include:

  • Stable and continuous returns
  • A continuous rise in the prices of property
  • Lower risk and higher return
  • Special incentives offered by the govt.

But when you have finally decided to invest in the realty sector, then purchasing the property is milestone to achieve for you.  It requires a lot of preparation and research of the market, before finally executing this decision. it is imperative to consult with a professional real estate agent, doesn’t matter how ideal the realty market seems. There are 5 things you must know before investing in the real estate property:

  • Available amount of investment

First thing first. Doesn’t matter where you are going to invest, it is necessary to be aware of your available cash holdings. Investment in property always require huge amount of cash. In this way, it would significantly effect the amount of finance in your hand.

One must also take into account that buying a property involves many upfront costs such as closing costs, documentation cost, taxes and down payment. And in case one in investing in residential home or shops then furniture costs, renovation and maintenance costs and annual charges need to be taken into account. 5 thing to know before buying real estate property. So before investing in property total amount of investment on hand should be clear and the decision to go for a particular property will take into account whole amount of charges involved in this process.

  • Your overall mortgage worth

As real estate investment requires huge chuck of money, so you might have to consider the option of taking loan from any financial institution. Banks lend money but the lending amount depends upon the mortgage ability of the client. If you are more credit worthy or you have great value in terms of fixed assets then you can get higher amount of credit from the bank. Your debt to equity ratio is highly important for any financial intermediary before granting you specific amount of loan.

So, in case, you are able to find a good investment avenue in real estate sector but you are lacking the required amount of investment then you would need the services of banks. And for this purpose you must be aware of and able to present the documentation for your owned assets worth.

  • Investment time duration

Time duration is really important to decide before carrying out any investment decisions. Time duration varies for various kinds of investment. And normally in case of real estate investment, you need more time before you can reap out lucrative returns.

Therefore, before investing in property you must be clear about the number of years you would be able to keep your investment in this sector. As if you will try to draw out the investment earlier, the rate of return might not be encouraging for you.

Surprisingly, as there are multiple avenues for investment in realty sector, so you can decide that where it is suitable for you to invest depending upon the time horizon. For example, in case of shorter time period, it is better to invest in houses or commercial shops. While if there is longer time duration in your hand then investment in residential plots seems more optimal option.

  • Annual rate of return

Of course, every investor is highly concerned about the overall rate of return offered upon the principle amount of investment. Higher the rate of return is, the higher are the chances of investment in that sector. But one must not forget the principle that higher returns are always accompanied by the higher rate of risk.

Due to this reason, you must be aware of your expectations that what a minimum level of return you expect annually from your prospect investment. Annual rate of return on property varies from place to place and according to the type of property.

Lets suppose if you own a shop, a house and a plot. Then obviously a shop will bear higher return as compared to house of plot. But what if house in located in high demand area but the shop is not much in demand. As rate of return is directly linked with the level of demand so it is mandatory to take into account both of these factors before investing.

  • Level of liquidity available

Real estate investments are normally associated with the issue of lack of liquidity. It takes time to convert your real estate asset into cash again. You must be aware that once the amount you have invested in property, buying real estate property. it would require at least one year or more, before you can use it in the form of cash.

But here is some interesting information for you. You can somewhat resolve the issue of liquidity depending upon the nature of investment in the property. The investment in hot spots is always comparatively more liquid than the investment in far flung areas.

The good news is that at, real estate agents are always here to help you  and answer your questions that you need to ask before carrying out your hard earned investment. You just have to specify your demands, available finance and future expectations about rate of return and we will offer you best advice as per best available options.

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