Sunday, January 27, 2013

Things to Look for in an Investment Property

Residential area in Meerssen
Residential area in Meerssen (Photo credit: Peter Köves)
When it comes to investment in the real estate sector, you have two choices in front of you. You can either buy residential properties or commercial real estate. This is the first decision you need to make, as many aspects of the two types of investments vary from each other. While commercial real estate may earn better rentals and better profit margins, the real estate ventures are a lot more expensive as compared to residential properties in Mumbai or any other city around the world. Location and industry of the target market are imperative factors to get handsome returns for commercial spaces. 

On the other hand, residential properties have shown steady increase in value over the past few decades in most cities in our country and outside. While location is an important factor for housing spaces as well, it does not completely control the appreciation or demand of the property. Other factors such as neighborhood, infrastructure, amenities, structure and design of the complex, connectivity of the area, proximity to local commercial hubs, and so on, also matter a lot. 

While both sectors of the real estate industry are different, there are common threads running through them. Here are some of the things you must keep in mind before investing in any type of property. 

Regardless of whether you are looking at residential properties in Mumbai or commercial real estate options in the business hubs of the city, you must look at your venture as a long-term investment. You cannot buy a flat in the city and immediately put it for resale and expect a handsome profit. There are some investors who do this, but they add value to the home by furnishing it and styling it to appeal to a particular class of society. Ideally the real estate investments you make should double in value over the next seven to ten years. In cities like Nashik, Pune and Mumbai this is fairly common if the choice of location and developer is good. 

While location of the property is the defining factor for its profit potential, one needs to know what people mean by the ideal location. The property should be in close proximity to lifestyle amenities such as shopping centers, restaurants, and activity centers. In addition, they property needs to have ample connectivity options to commute to different parts of the city. The neighborhood and amenities matter, but they are not all that location is about. Imagine having a flat that has a beautiful balcony opening out to the slums. 

Also, the building itself should be worth the money. Land and location are not the only factors responsible for capital growth in real estate. If you invest in a building that is architecturally superior and has style and good design inside and out, you can bet that it will be in demand years from now. This is why smart investors don’t mind spending a bit more to buy flats constructed by the city’s leading developers. The investors know that the best and latest amenities will be provided, increasing the overall value of the apartment. 

When investing in homes there are always things we look for, and you need to do just that even when you are looking at properties to invest and gain profits through resale or rent. For example, would you live in a house that had a floor design where you had the master bedroom next to the kitchen, or the bedroom without an attached bath? Then why would you buy one even as investment, even if it is being sold at a great price. Buy properties that you feel people would want to buy or rent. 

Stacy T. Morgan is a freelance writer for the . She has been working for a real estate agency for some years now and enjoys writing about residential properties in Mumbai, upcoming commercial complexes, why should one invest in real estate, etc. In her free time, she likes to hang out with friends and try different restaurants around the city.

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