Four things to check before you buy

Meera Siva | Updated on: Mar 22, 2015
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Shopping for a home to invest in is twice as tricky compared with buying for your own use. It must meet the needs of a potential buyer and also deliver return to you.

Location Areas where job growth is high will see higher demand and hence, price appreciation. One example is the Pune market which has seen good growth in prices due to the employment opportunity created by IT and manufacturing companies in this region. Neighbourhoods that have good roads, rail or metro connectivity will lead to overall development and price increase. Chembur in Mumbai, for instance, remained upbeat in the downturn due to infrastructure development. Social infrastructure, such as schools and hospitals, also drives property prices. A case in point is the Whitefield area in Bengaluru.

That said, don’t end up overpaying for the hype on some new development announcement. As your objective of buying is to earn returns, look beyond the common knowledge in picking the location.

Project features The features offered in a project, construction quality and maintenance standards determine price appreciation. For instance, a poorly built or maintained property will lose its value very quickly. Likewise, projects that lack desirable features, such as ample parking and power back-up, may be a difficult sell. But amenities such as swimming pool may be seen as extra maintenance by a buyer. You must, therefore, pick the features with an eye on the buyer’s needs.

Plan the sale A home is a very illiquid asset and the property market is cyclical. So you must have financial and emotional holding power to ride out these phases and be flexible about the exit. Also, price discovery may not be easy due to lack of public data. Identify the sources of reliable information — brokers, builders or online resources — you can tap to know the market condition and reach potential buyers.

Managing maintenance A home requires regular maintenance, including paying taxes and fixing routine wear and tear. And if the house is rented out, you have to handle problems such as plumbing trouble or painting.

Collecting rent, ensuring the house is well-kept and co-ordinating change of tenant must also be thought through, especially if you do not live close by. You can consider a property management service provider, if you do not have the time to take care of the maintenance.

Also read: Second house beckons? Weigh the risks and rewards

Published on March 10, 2018

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