WHAT TO KEEP IN MIND WHILE BUYING PROPERTY FOR INVESTMENT.
WHAT TO KEEP IN MIND WHILE BUYING PROPERTY FOR INVESTMENT.
A lot of people now want to benefit from rising property prices or in other words ‘invest’ in real estate as opposed to buying something for primary use.
However, lack of transparency and tight regulations means buyers are taking investment decisions without understanding the pitfalls.
Though you cannot make your real estate investments absolutely risk-free, you must be aware of the possible dangers on the road to making money through property ownership.
At this point it is important to keep in mind that until there are entry barriers and tough rules for developers, it’s your responsibility to verify the builder’s credentials.
Right from projects that exist only on newspaper ads to small developers advertising low-cost properties in small towns and suburbs, this sector is full of landmines.
“The best way to protect yourself from fly-by-night developers is to examine their past projects. This usually reveals all that you need to know” says Mr. Anil Mithas, chairman & Managing Director, Mithas Group, a real estate major that has many projects around NCR.
Instead of looking for dirt-cheap deals by little-known companies, invest in projects by reputed builders.
Investing in a property in the pre-launch stage is highly risky, since such projects are still on the drawing board and their final specifications can change drastically. At times, developers launch new projects and use the booking amount to buy more land. This creates a cash flow crisis and may delay the project that you are invested in.
Many people who wish to earn good returns also invest in properties near proposed infrastructure projects such as metro stations, expressways, highways and airports. However, buyers must be cautious because if the infrastructure project, for whatever reason, does not come up or is delayed, the value of the property may remain stagnant or even fall.
And as far as investing in land is concerned, you must be doubly cautious as land title records in India are in a bad shape. Several land-related transactions such as partition, mortgage, agreement to sell, court order and acquisition are not required to be registered. Even when a sale is registered, the history of the title is not verified.
So what we have in reality is presumed ownership, which can be challenged in multiple ways like ownership, extent of boundary, financial encumbrances and inheritance sub-divisions.
The lack of clear land titles means all land transactions are to a certain extent risky. If you are buying land, you must trace past ownership to avoid any dispute in the future.
The checklist that buyers must follow includes verifying if the seller is authorized to sell the land, whether the title is clear, whether there are pending taxes/dues and most important whether the plot is approved by the city development corporation and other local authorities, and clearances for further development are in place.
If you keep these basics in mind, investments in real estate could well be the best that you could ever make, giving you unmatched returns both in the medium and long run.
Source: http://www.unnatifortune.com/