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Golden Rules For Investing In Residential Real Estate

Golden Rules For Investing In Residential Real Estate

Golden Rules For Investing In Residential Real Estate
(Dreamstime)

Housing market attracts all- the modest home buyer and the wealthy investor. While the demand for residential real estate is unending, the returns might not remain appealing all the time, due to change in economic growth pattern. Therefore, there are few golden rules that you should not forget before investing in residential real estate, however, big or small the investment amount is-

Choose a healthy market

With growing liberalisation and options, Indian investors are being welcomed in global property markets. Several Indian developers have a strong foothold in the international market, especially in those cities which have a large population of NRIs. While these global markets remain interesting for Indian investors, property analysts believe that India has incomparable growth rate and has one of the fastest growing real estate market. So, if your intention is to keep your investment low-key, there could not be a better option than India. But if you are in the mood to make an investment in the signature asset, scrolling available options in other countries within your budget would mean no harm.

Study the location carefully

Once you have finalised the geography for your investment, choosing the right city/town should be your next step. Not all cities might serve you the kind of returns you are looking for. For instance, Delhi NCR might be a slow market but can offer you great rental returns. Similarly, properties in Mumbai are suited for long term capital returns rather than rental income. Bengaluru is more suitable if you want to keep your property occupied at high monthly rental along with attractive capital gains. So finalise the location, keeping in mind the city market and the idea of investment. You can also factor in the proximity of your existing residence and how frequently you can visit or keep watch over your property.

Look for growth drivers

Finalising the city is followed by choosing the micro-market. A wise investment would be close to employment hubs or at a location where new commercial development is expected in short to medium term. Look out for the city plan and those areas where there are new companies coming up along with average pay parity. Apart from this, areas where there are new shopping malls, complexes or buildings can be a potential housing market where rental income, as well as the capital appreciation, can be attractive. Look out for growth drivers which can be infrastructure development- flyovers, metro or a new road, commercial hub etc. These areas can be a goldmine for you as the housing demand tends to rise in medium to long term. Meanwhile, you can earn monthly income through rent.

Residential real estate is risky yet attractive. In order to make your investment fruitful, do not forget to follow the thumb rule- Location is the key to a successful real estate investment.

Last Updated: Wed Feb 01 2017

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@@Fri Jul 05 2019 13:15:19