Real Estate is a volatile market. Property prices may vary on a day to day basis as the industry is cohesive with numerous market factors. Financing, bank rates, government policy, economy and other such aspects of market comprises the array of factors that contribute to a capricious realty market. As realty business involves huge money, any investments should be made after careful scrutiny of all pros and cons of the market. Here are some inside wires from the industry to secure your investments.
Getting the business approach right
Many neoteric investors in the realty market have a sensation of getting their investments doubled overnight. However, this “overnight” might augment into a couple of years; and still investment might not yield the expected returns. Therefore, the approach of quick entry and quick exit is not quite helpful in this market. Make up your mind to enter the business as a wheeler dealer rather than a quick moneymaker. This will require careful observation of the business, its trends and the forces that jolts the market. Have a close observation of the targeted inventories and their prospects in the market. The Whys and Hows of investment should be devised strategically and insightfully. Setting the business approach on the right direction is the first step to enter into the realty business.
Legitimize your business approach
Although the realty market of India is not organized, the sector is on the brink of a huge transformation, primarily triggered through Government initiatives. Getting a license for the business is easy and the process itself will help to familiarize you with basic terms, traits and trends in the market. A legitimate business setup will let you to save on commissions. A license is the official trademark for an investment and it opens up many other avenues to grow and sustain on the market. A legitimate business does not have to deal with small glitches in the business. For an unregistered business these glitches that emerge as huge backlogs, leading them to major pitfalls.
Get the property insured through comprehensive insurance plans
Holding on to a Property Insurance protects the investment from any sudden disaster. Get comprehensive insurance plans for every real estate inventories that you are investing on to. This is the only and also the smartest way to protect a real estate investment. Additionally, ensure that the policy covers any type of loss comprising of natural or other disasters. The insurance should cover losses incurred by natural disasters like flood, hail or earthquake as well as fire outbreaks and other such damages. However, an investor must take care of the inventory as long as it is not possessed by a buyer to ensure its worth. Insurance does not cover wear and tear due to lack of management and caretaking. Therefore, along with insurance that ensures total returns in case of disasters, investors should also invest in caretaking of the real estate inventory until it is being handed over to a buyer.
Invest with insights on the history of the inventory
If investors do not look into the past financial performance of the property in the market, there is a possibility of being blown away by broker’s hypothetical tales of prices and demand. Get knowledge of the actual price of the property from the agents instead of believing on their Performa. Know the price at which the property was sold to the last owner and also the price paid by the owner before the present one. Balance the price raise and the time for which the property was hold by the owners. Also balance it with market condition and work out the reasonable price you will pay based on your calculations.
Secure financing for the property
If you are planning to investment on the realty market through financing, get into the business through a proper financing agency or institution. This will require an official business portfolio and can get you profit out of the thin air. Secured real estate loan can be obtained to buy or refinance a commercial property. Commercial mortgages apply to buildings that are used for business and rentals. Although, commercial mortgages have higher interest rates and shorter repayment periods and can offer maximum returns.
Realty business has been lucrative because once an investment is made; the margin of returns is always at the profitable side. Price of property seldom falls below the margin because demand always tends to grow. How fast the returns are achieved and how much is the profit -- are the prime facets of business in realty market. This positivity in the business lures investors to plunge into the sector, some as full time investors, and others, as part time investors. The extent of returns or profitability in the market depends on how agile and updated the investor is. Investors must be agile enough to move in tandem with the volatility of this market.
(The author Gaurav Yadav is Director at Uday Homz)
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