Even though there are several good options for investment available in the market like fixed deposits, mutual funds and stocks among other things, a large chunk of the Indian investors prefer real estate as their investment option.
No wonder the demand for second homes is growing, especially among those in their late thirties and mid-forties. Experts believe that better capital returns and the need of a vacation home are the two most popular factors driving the demand of second homes. This said and done, how many of us can afford to buy a second home? What are the risks involved? How can we manage our finances efficiently that the EMIs of the second home do not hurt our liquidity or savings?
The tips and tricks given below might answer some of these questions
1. Watch out for the right time: One must look out for the right time for investment and consider all the factors and behavior of the market very carefully. For the last two years, the real estate market almost all across India has not reaped very high returns as both demand and sales volumes have been low. However, in the last six months, things have started to improve and investors are returning to the market.
2. Try to limit your search in areas with steady appreciation rates: Recent studies by JLL and Knight Frank have pronounced that peripheral areas of metro cities have had proved to be good long-term investment options. Though you might not get good rentals in the beginning those looking for returns post 10-12 years, might find these areas lucrative hubs. Do make sure that these areas fall under the municipal corporation’s limits and the state and the central government have infra plans in the pipeline
3. Define your goals and interests: Be specific about your motive of purchase and what do you want to get in return from it. For instance, if you are investing in a property as your vacation home, you can fetch good returns by renting it out for some time. You should do your homework about the current preferences of the tenants and what the kid of people moving in there, so as to gain maximum benefit. For instance, you can expect white-collar employees to come for rental options near IT hubs in metro cities
4. Consult an experienced property consultant: It is better to work with an experienced property dealer who can help you understand well about your requirements and suggest you the best as per availability in the market. There are no rules that define a good property consultant or a broker but do make a thorough research about his reputation in the real estate market. Experts recommend going with those with at least five years of experience in the realty industry
5. Determine your affordability: Discuss with you family or partner about the amount that you can afford to spend as monthly EMls in case you are going to avail a home loan for your second home. Moreover, it is very important to ascertain your affordability by defining you current expenditure pattern, liabilities and liquidity. If needed, consult a financial consultant for doing this job.
6. Explore the financial market: Before finalising any financial institution for your home loan. It is highly recommended that you explore the market once and negotiate them to cut down the home loan interest rates. This can bag at least 5-1 0% of a direct benefit to you.
7. Act like a tax savvy: You should act like a pro when it comes to tax-related matters. The tax implications on a broader perspective depend on how sound is your financial situation. One should consider all property taxes, utilities and other applicable expenses. On the counterpart, if you are thinking to rent out your property then. You have to report all rental receipts to the IT Department as income excluding the expenses you have made against that income.
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Email us at - sales@squarefeetgroup.in
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