5 Important Factors to Consider While Investing in Real Estate - Home Loan Stories - Kotak Bank
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14 NOVEMBER, 2019

Whether it is the ever increasing cost of the properties or simply having high-ticket assets, the real estate market is called an investor’s goldmine for various reasons. If you are also one of those potential investors willing to buy assets, then you need to consider the following factors before jumping into the real estate market.

Knowing the purpose

Before starting to check out the property catalogues, the first thing you need to define is your purpose behind this investment. Obviously, you want to invest your money by buying a property, but you need to decide what type of property will serve your purpose best. For this, you need to consider the following four types of properties,

  • Residential properties:

This types includes all types of housing units. These type of properties are considered as safe investments due to guaranteed returns most of the time.

  • Industrial properties:

These properties are famous among the investors due to the stable cash flow.

  • Retail Properties:

This type includes retail shops, which attract savvy investors because of the high yields usually.

  • Commercial Properties:

All the office-spaces are included in commercial properties. These properties are usually known for their excellent appreciation value.

Deciding the purpose helps you to concentrate the efforts to increase the potential benefits. If your objective is to get quick benefits from your investment, residential properties can be the right option for you. The increasing number of home buyers have maintained residential real estate in a dynamic state. You can either rent out the property or sell it when you get good value.

Considering your financial status

Once you have decided on the type of property, you need to ensure that you are financially prepared for this long-term financial commitment. In the beginning, buying a property consumes a significant part of your income. However, if your income is stable, you can take the assistance of a home loan.

If you are planning to take a loan to buy a property, you need to prepare certain things for it. The first important thing is that you need to check if your credit score is good. Banks or financial institutions check the credit score and some related factors to determine the housing loan eligibility.

Evaluating the expenses

Regardless of the type of property, the prices will change and usually increase during your ownership every year. However, you also need to take care of other expenses like maintenance, taxes, and interest rates on the home loan. Thus, calculate your total profit before deciding to buy a property and plan your financial budget accordingly. You can evaluate the expenses by checking previous bill copies, as these documents will give a clear idea about upcoming payments.

Analysing properties

To get more returns on the investment, you need to analyse conditions and facilities available with different properties keenly. The factors like location, amenities, etc. highly influence the costs of properties, but paying more price for them also increases the returns on investment in the future.

Targeting the tenants

When you are preparing your property to rent it out, consider the viewpoint of tenants. This will help you to make strategic improvements that will attract buyers and guarantee you a good return. The type of tenant who you select is also a crucial thing to consider. Search tenants having a good background. Take some interviews to ensure a trouble-free residential investment.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.