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4 Ways Your Investments Can Go Totally Wrong

4 Ways Your Investments Can Go Totally Wrong

4 Ways Your Investments Can Go Totally Wrong
(Dreamstime)

Real estate investment can be tricky, especially for the first-time investors. MakaaniQ lists four ways in which your investment can go wrong:

Late beginner

There is no ideal age to start investing. The consensus is that the earlier the better. This helps you spread loans over a longer period of time. It is usually risky to begin late. You may have to compromise on your other needs, like buying a second home or financing your child's education. Do not compress your loan repayment into a few years by paying high EMIs, if you are not too sure about it.  If you are buying real estate late in your life, this is probably to buy a house to live in. By investing in a second home, you can be financially secure after retirement, so long as the rental yield is high.

Not doing formal research

If you do not know much about the nature and prospects of the locality where you want to buy real estate, you are going about it the wrong way, right from the start. Find out whether the developer is credible, and take a hard look at his track record. Check the legality of the project. Look into other documents like the occupancy certificate. Is the infrastructure in the area improving? Is the livability score of the area high enough? These are the questions you should ask. Formal indices help you understand the market really well.

Will capital values rise in your neighbourhood? If you are an end-user, this probably would not matter that much to you. But a healthy rise in prices indicate that the neighbourhood you live in is improving in aspects like safety, water supply, accessibility, drainage, sewerage, electricity and connectivity to strategic locations. Such trends reflect in formal indices, a handy guide for every buyer.

Not understanding the payment plan

Do you find it hard to understand the various schemes the developer is keen to offer? Hire a lawyer, cross check and make sure that you are ready for it. Such plans work in your favour only if it does not disturb your finances. Very often, the offer looks so attractive that you fail to understand whether it is right for you. Do not give in to word of mouth assurances. It is better to document all promises. If it is necessary to challenge your developer, this puts you in a stronger position.

Miscalculating the cost

There is more to the final cost of the property than it meets the eye. Brokerage value, preferential location charges, insurance, stamp duty, circle rates, TDS, consultancy charges, development fees and in-house memberships and facilities may cost a lot more than you think. So, the actual price could be much higher than the listed price.

If it suits him, it suits me is an approach that investors should be wary of. Your priorities might be very different that of the person next door.

Last Updated: Fri Oct 28 2016

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@@Fri Jul 05 2019 13:15:19