Investing in property has, and will continue to be a popular practice. Aside from the basics such as deciding your budget, there are a number of areas that potential investors overlook when it comes to investing in properties. Here are a few dos and don’ts that need your attention.
Find the right property
The ‘right property’ depends on your budget, financing and purpose. Are you looking for a home for yourself and your family? Or a property to lease and earn rental income from? Or perhaps one for capital appreciation that you can eventually sell? Depending on your ultimate goal, here are some dos and don’ts to help you decide which property to invest in:
1. Look for potential returns:
Look at the resale or rental value of houses in the area that you are choosing. This will help you assess the returns that you stand to make from your purchase. Additionally, you could find out appreciation of other properties in the area to understand the future rise in value.
Additional Read: Heres Why You Should Opt for a Home Loan
2. Do your homework:
Don’t neglect other aspects such as the neighbourhood, crime rate, schools, recreational spaces, parks, footpaths, distance from the nearest medical centre, etc, when you consider a property. This will not only strengthen your decision and offer peace of mind, it will also give you an insight regarding how your property will fare.
3. Factor upcoming changes to the area:
If a metro station, new airport or highway is under construction, it indicates a potential increase in the value of the locality. As a result, the value of your property rises too. So, make sure that you study projected infrastructural development of the area where your new home is situated.
Additional Read: Understanding Common Home Loan Terms to Make Better Decisions
4. Ignore property taxes:
When you buy or sell property, keep the capital gain tax in mind. For example, selling a property before three years from date of purchase involves short-term capital gains tax. When you sell a property after three years from date of purchase, long-term capital gain tax is applied, but after indexation. Further, the IT Act gives you a capital gains tax exemption from the sale of a property if you invest the gains in a residential home within two years from the date of the sale. Knowing all these parameters can help you save a bundle.
Trust builders blindly
One of the biggest regrets that investors have is wishing that they got into business with the right kind of people. After all, you don't want to forge a relationship with a seller only to find out later on that he/she withheld information from you or gave you inaccurate information. So, researching about the builder and his/her reputation is extremely important.
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