Do you desire to have a share in real estate investment? If yes, welcome to the majority mindset club. Real estate has been and will be a popular investment choice for ages. Especially in times of uncertainty, real estate has proved to offer the most security and returns. However, it is only sometimes the most convenient option, as investing in real estate requires a lot of money. At times, investors also get carried away and suffer in the long run. To help you stay cautious from doing so, we have listed down five essential factors you should know.

The present real estate market offers many avenues of investment. Firstly, analyse if you wish to invest in commercial or residential assets. Conclude this decision after carefully analysing past investment history, returns, compliances and more. To start with this step, look closely at your investment's purpose and budget. Answer if you wish to preserve, rent or resell it later on. Also, take into consideration the tenure of your investment. Are you looking for a long-term or a short-term investment option? And then choose accordingly.

Now, this is one of the most important decisions you will make in your real estate investment journey. Especially if the intended purchase is purely for investment purposes, keep a broader view and look at the open scope. Cities with the right audiences to respond to your property type are ideal. In cases of investments in the commercial space, it is wise to select a Tier-A or Tier-B city. 

 

Some key analysis factors include population and demand growth and income level development. Once you have decided on the city's choice, move on to deciding on the right micro-market. Look at connectivity factors that can add to the market value of an area. Pay heed to macro and micro factors to make a particular choice. 

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In a country like India, real estate prices are often linked with the buyer’s ability to haggle and cooperate with the developer. So, this is a factor where your social skills will come in. Ideally, look at projects by developers with a good reputation in the market for fairness and transparency. In addition, look for other factors like premiums, taxation and deprivation. 

 

After thoroughly considering multiple factors, draw up the exact valuation of the property and finalise if it is the correct investment choice. 

The market dynamics will also differ depending on the nature of your preferred property. Check home loan interests, developer’s offers, and Government regulations in residential properties.

 

Check if the project or property is registered with RERA and verify all the documentation. Then, investigate other details about the builder to check their status on necessary approvals from authorities. Next, research and study the applicable laws in the area of your property and the taxation policies for the same. 

If you find it challenging to decipher the laws, it is best to hire a lawyer for professional advice. Consider this an investment that will help you make a good choice for significant returns.

While this is undoubtedly the end goal of any investment decision, it should be carefully considered. Long-term appreciation and ROI usually attract people to invest in real estate. So, before starting your investment, do a fact-check of your expectations. Look at the profits you are expecting and the tenure you are willing to put into it, and then see if the choice of property fits the criteria. 

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Despite countless investment options in the market, real estate has constantly remained one of the popular choices. And this stands true for all the right reasons. Here are the benefits of investing in real estate:

The ability of real estate to generate cash flow is quite commendable. A regular inflow is a given if one gives out the investment property for rent. In most cases, this cash flow only strengthens over time.

Numerous tax breaks and deductions are in favour of real estate investors. First, one can deduct the reasonable costs of owning, operating and managing a property. Additionally, since an investment property's buying and improving cost is depreciable, one can benefit for decades. Secondly, investors can also defer capital gains.

Time is a testimony that real estate values generally tend to increase. With good investment, one can bag a huge profit when it is time to sell the invested property. Alternatively, rents rise over time if one doesn’t see reselling as an option. 

On paying down a mortgage on a property, one builds equity wealth. Now, these assets gradually become a part of one’s net worth. Then, the leverage to increase cash flow and wealth comes with more property buying.

The diversification potential for investing in real estate is quite good. Adding a property to your investment portfolio can provide a higher ROI and lower the volatility of your investment portfolio.

The ROI on real estate investments varies and depends on location, asset class, etc. But generally, despite all the highs and lows, a breakthrough is achieved over time, and one usually manages to beat the average.

This capacity of real estate investments stems from the correlation between demand for real estate and GDP growth. With the expansion of economies, demand drives higher real estate prices and rents. In turn, this offers better capital values. Therefore, real estate enables one to pass on inflationary pressure to tenants through capital appreciation.