WHAT NRIs SHOULD CONSIDER BEFORE MAKING PROPERTY INVESTMENTS IN INDIA.

It is said that you can take an Indian out of the country, but you can’t take India out of him. So the question invariably arises, sooner or later amongst NRIs – investing in a property in India.

While it would make perfect sense to have a home in the country you grew up in and also profit from the fact that property prices usually appreciate over time, nevertheless there are still a few things to consider before you go ahead and invest.

To start with where in India are you going to buy your property? The best choice unfortunately is not always the city you or your spouse grew up in. Other issues will now govern this decision too. Like where are you most likely to find employment in case you return for good? What about your children? If they are still of school going age, you may need to consider where there will be least disruption in continuing their education.

Then again there are issues about climate that your family has got used to.

The other factor to consider is whether you can afford to sink substantial capital in a property that will in all probability be vacant until you move. It will help if you can give it out on rent. But where do you get a good tenant? It is important to find a property manager you trust before diving deep at this end.

If you are to invest in a ready property, how do you plan to fund it? Are you considering a loan for the bulk of the payment? If so, you will probably take a cheaper foreign currency loan from your current “home” country, but do consider foreign exchange volatility risks.

You need to plan even more carefully if the property is under construction and the payments are to be made in tranches, based on work completed. You may have the total money already. So you will need to invest it temporarily so that you earn some return and yet keep the fund available when required. A professional financial adviser should be able to guide you on this.

According to Mr. Anil Mithas, CMD of Mithas Group, “To help guide NRIs in property selection most reputed builders now showcase their projects in their host countries so that these buyers can finalize everything without making an expensive fact finding trip to India. For our projects in the Delhi NCR region, we continue to participate in property fairs and road shows abroad and then have a detailed one on one interaction with our customers to guide them through the entire process. We also have schemes that offer an assured high rate of return from the date of booking, buy back guarantees, etc. which offer flexibility to our NRI investors.”

Before deciding on a property, you need to determine in whose name would you register it. Will it be in a single name (not advisable, from an estate planning viewpoint) or in joint names? Whose name will come first? In India, tax liability falls on the first owner; though joint owners can claim tax breaks if they are jointly making equated monthly installment payments for the loan they have taken. In some states in India the property registration fee is lower on joint ownership and least if registered in the name of the wife.

Once you have a property in India don’t take the risk of putting all your eggs in one basket. Don’t fall for the “advantage” of familiarity by investing in multiple properties in the same city. You will only multiply your risk factor.

Armed with this information Mr. NRI, you are now ready to invest in India. We hope we can help multiply your returns.

Source: http://www.unnatifortune.com/