For most people out there, the main aim of buying a property as a real estate investment is to make considerable profits. However, there can be instances where you may purchase real estate without considering all factors involved and without even calculating the full cost. And when you do this, unfortunately, you might not get the exact returns you wished for, or worse, make a loss.
In order to make sure you don’t make losses while selling a property in India, you must keep in mind a few mistakes to avoid while investing in the real estate market. Also, a buyer must check a dozen properties before the search can even begin to be comprehensive and to avoid impulse buying. Property hunting requires a lot of patience, and not having this can lead to impulsive buying.
So, in order to make sure you don’t make a loss while selling real estate, here are 6 common mistakes to avoid while investing in a property in India.
Mistake 1: Skimping on research
The foremost and the most common mistake to avoid while investing in real estate in India is skimping on research. Before buying a television set or a car, most people usually compare different models, ask plenty of questions and try to determine whether the purchase they are considering is worth the money or not. The due diligence process that goes into buying a property in India must be even more rigorous.
Not only does it make sense to ask a lot of queries about the real estate, but one must also inquire about the locality in which the property is located. Afterall, what good is a beautiful villa if there’s nothing around the corner?
So, you must research well before choosing the right property for investment and avoid skimping on research.
Mistake 2: Not knowing your credit score
If you apply for a home loan for your property purchase in India, your lender or financial institution is definitely going to check your credit history. And any issue in your credit history might lead to a loan application being rejected or approved with a high-interest rate.
You must know that the best loan offers are usually reserved for borrowers with a credit score of 750 or more. They also get the benefit of low-interest rates. Therefore, before you apply for a home loan, make sure to take a few minutes to check your credit score online.
Mistake 3: Not weighing the full cost of property investment
Another common mistake to avoid while investing in real estate is not weighing the full cost of the real estate investment. When you invest in a property in India, you must weigh the full cost of investment.
For example, on a base price of Rs. 100, your additional charges of homeownership like GST, stamp duty, registration charges, furnishing, brokerage, costs of borrowing, and much more. Can easily pull the whole cost to Rs. 120 or more. So, it is recommended to weigh the full cost of property investment beforehand to get prepared for the same.
Mistake 4: Aiming for short-term results
Aiming for short-term results is one of the most common mistakes to avoid while investing in real estate. Most real estate investors make the mistake of entering the market without any clarity on the sort of returns they can expect and the time frame required to see a return on their real estate investment. This could eventually result in regrets, misunderstandings, and financial losses.
As a result, if you are considering big results in property investment, avoid seeking instant and short-term benefits. Overall, real estate investment is a long-term investment that can show you excellent results in the long run.
Mistake 5: Paying more than it’s worth
Once you are done with market research, make sure you only pay what real estate is worth in any scenario. But what if you missed a serious problem with the property condition, like a pest attack that could cost you more money to repair until you can put the property back on the market? In such a case, you might end up spending more than its actual worth.
Also, if you intend to rent a property, it is better to avoid leaving it empty for an extended period of time. Vacant rental properties turn into waste, demanding maintenance money but generating no revenue in return.
Mistake 6: Failing to have a backup plan
Lastly, one of the other common mistakes to avoid while investing in a property is failing to have a backup plan. Did your plan A fail? Don’t worry! There are still 25 more letters. Plan A is always a good start, and you must stick to it but always have a plan B in place, i.e., a backup plan. For a newbie like you in the real estate market, it is advisable to have a backup plan for worst-case scenarios. It would not be a fruitful decision to invest all your money in the property for the first time.
What would happen if you could not sell your property for a long time? Will you offer it up for rent? Plan everything beforehand, involving what happens if your financial goals fall through.
Consider that even experts can make mistakes by not doing enough research and market analysis. If you can avoid these 6 common mistakes while investing in a property in India, you can become a successful investor in the real estate market.