5 Misconceptions about Property Investments

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Investing in property can be very fruitful and can secure your family for decades to come, provided you make a smart investment. Earlier, banks offered only home loans to purchase houses or apartments. Nowadays, many people are able to purchase land easily due to the availability of property loans.

There are a number of misconceptions when it comes to investing in property. It’s good to be informed before you decide whether to invest or not to invest in property. Let’s focus on the main misconceptions here.

Property investments are a quick buck

It is wrong to think that property investments make money fast. Property can take years to appreciate sometimes. Some people make a good profit from the land only after waiting for a decade or two. A lot of factors play a role in the time it takes for the land value to appreciate. For example, land value appreciates faster in developing cities. One also has to take into account the time it takes to buy and sell property, and the process involved.

Before investing, take into account what you need, and why you are investing in property, and find a suitable investment that will meet your needs.

All property investments are fruitful

People have the idea that all property value increases. As already stated, land can take decades to appreciate. The value varies on a number of factors such as location, basic amenities, shops and malls, and work opportunities.

For example, you made a safe investment, but you may have overlooked an important flaw, such as no water supply simply because you thought water supply was a given. That will factor into the rent you could charge on the property. This can lead to the investment being a loss after taking into account the purchase price, the expenses incurred, and the depreciation of value due to the lack of basic amenities.

Always ask the right questions, check on basic amenities before being blinded by other amenities offered, be informed, and seek advice from people, firms, or lawyers who are knowledgeable on the subject before going forward.

The price per square foot is the price you will pay

When we hear ₹1,000 per square foot for a 5,000 square-foot property, we think, “1,000x5,000 = Rs.50 lakhs.” That sounds like a good figure. But before you purchase the land, there are a number of payments to be made that people do not account for in their minds. There are registration fees, stamp duty, and taxes, to name a few, to be paid before you can own the property. Make sure you do some thorough research before applying for a property loan if you intend to.

Before investing in property, it is good to educate yourself on the necessary documents required, fees to be paid, laws to be followed so that you can make an informed decision.

Investing far away from you is risky

It may seem better to invest in the area that you know, or in the CBD where it is a sure shot of getting a good return on your investment. This is not necessarily true. If you do your research and invest smartly, you can make a safe investment away from you, as well as away from the city.

Properties in the suburbs or outskirts are known to appreciate in the long term. Ensure that you are not buying revenue/agricultural land. The Government of India does not allow the sale of revenue land, and if you buy the property, ultimately, the fault lies on the blind buyer, not on the seller.

Always research the property, find out all the details you can. Just as there is a lot of credit card fraud out there, there is also a lot of fraud when it comes to real estate. Ensure you do a thorough check for scams before you make any investments.

Investing cheap is safer

Some people, especially first-time investors, feel that if they invest less, the risk is lesser because you stand to lose a smaller amount of money. This is far from true. Property is cheap for a reason. Obscure location, low accessibility, high-voltage power lines could be some of the reasons why the property is cheap. Figure out why the rates are cheap before you make an investment. It is actually much safer to invest in mid-range properties because the returns will be better.

Always make an informed decision, and do not rush for a better price. It is important to know what you want and why you want it. Look at all the factors and reasons surrounding your decision. If you are looking to buy a house but don’t have the funds for it, a housing loan can help you achieve that goal. To avail a loan, you might be required to take a home insurance policy so that the bank’s risk is reduced in case of any untoward event. Invest smartly and you will reap the benefits of a good investment in property.