Investing in real estate can be a very tricky proposition. In most instances people tend to put in all their savings, plus take loans to purchase a property. This being the case, one has to exercise extreme caution at all stages of the purchase to ensure that the money one sinks into real estate does not go to waste.
Budget
Before taking the plunge and buying the property you have your eyes on, it is essential to get your finances in order. Set yourself a budget and try not to stray far away from it. Remember not to spend money that you cannot afford to spend in the first place. You should ensure that the EMI going out of your pocket is not more than 40% of your monthly income.
Research
Now that you have gotten your finances in order, it is important for you to do your homework. You will know your requirements, so work with localities which are a match for those requirements. Some of the basic criteria one should keep in mind are:
Locality
Access
Existing and proposed infrastructure projects
Connectivity
Presence of social infrastructure
Safety
It is best not to invest in far flung locales which lack even the basic amenities such as roads, water supply and drainage system. Do not get swayed by promises of upcoming infrastructural projects and invest your money. Infrastructural projects take time to kick off and it is best not to pin too much hope when you are yet to see proof.
Checking the credentials of the builder
The real estate industry is littered with builders who are upstarts and are unreliable. If you come across an offer that is too good to be true from a small time builder, it is best not to funnel your hard earned money into that project. The best way to go about checking the credibility of builders is to look at their past projects. This will give you a clear idea about how a particular builder works and if you can trust him with your money.
Legal documents
Title deeds are the key to any property transaction. If the seller does not have a clear title deed, then do not purchase the property
• Absence of a clear and marketable title deed is a deal breaker as it will lead to legal hassles in the future
• Insist on seeing the original title deed and have it verified by your attorney before buying the property
• Ensure that all clearances related to the property are in place before you acquire the property
• If you are looking to purchase an under-construction property, get the builder to handover the allotment letter and the development agreement
• The allotment letter has details such as the price of the property, floor plan, delivery date of the project and details of the liability incurred by the builder if there is a delay in delivering the project
• The development agreement lists out the terms and conditions under which the landowner has allowed the builder to use his property
• Ensure that all the taxes related to the property you are about to purchase have been cleared before you actually buy the asset
• Whenever in doubt, it is always advisable to take expert assistance
Delay in delivery
When you decide to purchase an under-construction property, chances are that the project may be delayed. A delay of 6 months is acceptable but anything that goes beyond a year or more is bad news for you. Picking projects which are in the pre-launch stage are considered to be very risky. To mitigate such risks, check the delivery track record of the developer and look out for projects which are in the under-construction or ready to occupy stage.
