Aspects to consider while investing in Residential Realty
Investment in real estate being capital intensive, is fraught with many risks and uncertainties. Hence, it is imperative that a person looking to invest in real estate should consider various aspects that may have far-reaching implications. There are various aspects that a real estate investor should consider before investing in residential realty. Some of these are:
Knowledge of the area:
This is one of the primary aspects that a successful investor should be aware of, especially with regards the future prospects of the area. In this regard, the investor should have access to the Master Plan of the city. Besides, he should be able to evaluate this document in an effective manner so as to obtain an insight into how the area will develop in future.
Verifying developer and project credentials:
After researching about the area, the next steps is to verify the developer’s as well as the project credentials. In this regard, it is important to cross-verify the track record of the developer with regards to the previous completed projects. This will enable the investor to ascertain about the quality of these projects as well as whether they were completed within the time-frame stipulated.
After collecting the necessary background information on the developer, the investor should ascertain about the validity of the project that he is planning to invest in. In this regard, he should ensure that the project has all the necessary permissions from the local authority. Besides, the Commencement certificate should have been obtained so as to start construction on the project. While investing in a plot, it is essential that the investor does a extensive search with regards to the title of the plot in question.
The investor should also verify if the project has the approval of a nationalised bank for mortgage. Since the necessary checks and verifications are done by the bank itself, it saves valuable time of the investor. The investor should also read the Sales Purchase Agreement carefully before he signs on the dotted line. This will enable him to evaluate the agreement, both from a commercial as well as legal perspective. He can also seek the advice of a legal expert to ascertain the validity of the transaction. The investor should also be aware of his rights in case the project gets delayed beyond the stipulated time.
Awareness of clauses while availing of a bank loan:
While availing of a bank loan for investing in the project, the investor has to be aware of all the clauses that accompany this facility. This includes clauses with regards to availing a home loan by including a co-applicant, pre-closure of the loan, rate of interest as well as the repayment schedule. The investor has a higher possibility of his home loan getting approved by the bank if there is an employed co-applicant. He also has to ascertain if the loan can be pre-closed before the scheduled period specified by the bank, and if there is any pre-payment penalty involved. He also has to decide between a fixed and floating rate of interest. The bank generally allows him to avail of fixed rate of interest during the initial phase of the loan re-payment. He also has to be aware of the repayment schedule which is the maximum number of years that he can take to repay the loan amount as well as the EMI that he needs to pay.
Keeping in mind all these considerations, he can choose the residential project that he feels is best suited to his requirements, and which has the approval of a nationalised bank through which he can avail of a home loan.
