4 things a smart property buyer must know

By Jay Dee Infra In Home Buying Tips No comments

4 things a smart property buyer must know

1. Locality

Location is one of the key factors to consider before buying real estate. It is always prudent to buy in a high-growth area where there is potential for growth and subsequent capital gains. Keep things like connectivity to business areas, proximity to educational institutions, malls, hospitals and other important social infrastructure in mind.

It is also important to be aware of future planned developments in the area that could have a positive or detrimental effect on the future value of the property. At the same time, the location should be suited to your personal requirements and budget. A healthy mix of the above two considerations will guide you towards your ideal location.

It is best not to buy or invest in far flung locales which lack even basic amenities such as roads, water supply and drainage system. Do not get swayed by promises of upcoming infrastructural projects and invest your money. Infrastructural projects take time to kick off and it is best not to pin too much hope when you are yet to see proof.

2. Builder Overview

Before purchasing a property one should look into the credibility of the builder. This essentially means checking on the developers’ previous projects, quality of construction, rate of appreciation in value, current demand in the market and number of future projects that are being undertaken. It is also an added advantage if the developer is affiliated with a governing body like CREDAI.

The real estate industry is littered with builders who are upstarts and are unreliable. If you come across an offer that is too good to be true from a small time builder, it is best not to funnel your hard earned money into that project. The best way to go about checking the credibility of builders is to look at their past projects. This will give you a clear idea about how a particular builder works and if you can trust him with your money.

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3. Property Type

You can select from various residential property types like residential plot or land, low rise apartments, multi-storey apartments, independent houses or villas, row houses, and builder floors. Factors like city of purchase, intention of purchase, budget, available supply, security etc. will help a buyer decide which property type to go for. Each type comes with its own set of advantages and disadvantages.

Land is the ideal long term investment option and gives high returns but maximum property frauds also happen with land deals. When buying an apartment the land share the buyer gets is minuscule but they are considered to be more secured compared to land.

In metros due to high property rates and security issues, apartments have become more popular whereas in smaller towns land investments continue to be the ideal choice. One gets more facilities in a gated community compared to owning an individual house or a villa, but gated communities also come with little flexibility when it comes to customisation.

These days in cities with high land cost builder floors have also become a popular choice. These houses are a mix between an apartment and an individual house.

must know buying homes

4. Financing

Before taking the plunge and buying the property you have your eyes on, it is essential to get your finances in order. Set yourself a budget and try not to stray far away from it. Remember not to spend money that you cannot afford to spend in the first place. You should ensure that the EMI going out of your pocket is not more than 40% of your monthly income.

It is essential to ensure proper financial planning before you make the decision to invest in a property. The first step would be to review your current financial obligations such as student loans, life insurance or any other commitments to get an idea of your true monthly income. Your budget for buying your home should be based on your household budget and how much money you can afford to put aside for the EMI of a home loan.

Besides the EMI you should have a healthy savings account that can pay for the additional incidentals such as stamp duty, registration, car parking, club house charges and other sundry charges by the builder. An important advice by financial experts is to set aside 4 to 5 EMIs as reserve funds for unforeseen circumstances such as loss of employment or any situation that exerts pressure on financial resources available at your disposal.

A common dilemma for the first-time home investor is choosing between a fixed rate of interest and a floating rate of interest. A consumer has to choose between peace of mind by opting for fixed home loan where the interest rate remains constant during the entire loan tenure and does not change with market fluctuation or if they should take a risk by going for floating loans.

Source: http://blog.indiaproperty.com/4-things-a-smart-property-buyer-must-know

4 things a smart property buyer must know

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