Real estate In india

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Real estate Investment can be considered as one of the safest investment option in comparison to other options like Mutual Fund, Share Market etc that deals with heavy risk factors. Real estate offers multiple options for each category of investor depending on their budget and personal choice. A buyer can either opt for cheap and long term investment option by picking a vacant land in outskirts of the city or can opt for a rented property within the city that may be costly but will start offering monthly returns immediately after the purchase. Real estate industry is too vast to understand in a short span of time and need lot of research and experience to be an expert advisor or investor. But for a start, one can definitely initiate by investing in a small scale property of low budget. This is to note that property investment is very much unexpected and no one can conclude the returns of a particular property in a specific time. Decision has to be made after considering all factors related to the product that includes location, Features, Age of property, Finance options and legality.

If we talk about India, it is always the first choice of investors not only of the Indian citizens but also of NRIs. Indian Market offers Good returns even when the global real estate market is in the sinking position and becomes a rewarding proposition for NRIs due to its transparency and simpler tax provisions. In India, NRI enjoys equal privileges as that of an Indian citizen except for the permission to purchase agricultural/plantation property or farm house. Before entering into these investment options, knowledge of two important acts is quite essential – Foreign Exchange Management Act and Income Tax Act. A fair knowledge of these two acts will enable the Non Residential Indians to take a wise decision after considering all provisions of the law.

FOREIGN EXCHANGE MANAGEMENT ACT

As per the FEMA, Any NRI has the permission to invest in India for the following activities with reference to acquisition and transfer of immovable property in India:-

1. Can acquire immovable property by way of purchase other than agricultural land or farm House.
2. Can acquire immovable property by way gift from an Indian citizen residing outside India or PIO except agricultural land or farm house
3. Can acquire property by inheritance.
4. Can transfer any immovable property other than agricultural land or farm house by way of sale to an Indian citizen.
5. Can transfer agricultural Land or Farm House by way of gift or sale to an Indian Citizen.
6. Can transfer residential or commercial property by way of gift to a person residing in India or to a person residing outside India who is a citizen of India or to a person of Indian Origin residing outside india.

Considering these two acts, one can easily opt for a property in India and can convert it into huge profit. While proceeding ahead for any investments, one should deeply understand the basics related it. An Indian is well aware of his nearby locations, investment options available, and other facts related to that investment. But for an NRI, it becomes quite difficult to opt for a property while sitting across the country. Whoever may be the investor, only smart decisions can bring one to the effective results and this smart decision involves lot of research.

DIVISION OF INDIAN INVESTMENT INTO TIER1, TIER 2, and TIER 3 CITIES

Indian investment options can be divided into Tier 1, Tier 2, and Tier 3 cities in terms of location of the property. Each category of city offers with multiple options of property investment that vary according to the type of property, budget size, and returns expected.

Tier 1 cities include Delhi, Mumbai, Hyderabad, Bengaluru, Chennai and Kolkata. These cities are quite well developed and equipped with multinational national companies. Such cities may be costly in terms of property investment but offers good returns along with rental income. Due to multiple job options available and endless number of colleges, large number of population is regularly migrating to these cities. Hence need more and more space for residence and commercialisation. Investment in these cities can never go waste if done with well research and complete information.

Tier 2 and Tier 3 cities are in the next phase of development after Tier 1 cities. Due to over expensive property rates and cost of living in Tier 1 city, it has created a need for alternate options in nearby places. Tier 2 and Tier 3 cities are one the best options that offers developed localities with cheap residential options. After Tier 1 cities, these are the fastest developing areas and offers productive investment options. This is well known that investment always comes out with better returns in developing localities as compared to fully developed areas. Hence opting for options in cities like lucknow, Vadodara, Jaipur, Indore, Noida, Faridabad, Ludhiana, Nasik and many others, will be an intellectual decision.

Decision making should always be done keeping your own personal facts in mind rather blindly trusting any property broker. One’s own research plays a major role in avoiding the frauds and cheats. India is vast with multiple options in multiple cities according to the location and features.

SELLERS OF INDIA

Gathering information only about the country, its cities and government acts is not sufficient until you know the seller. Property seller in India can be anyone who gets a good deal on his/her property.

First and the most important Sellers are the Builders that can be either a big builder owning a huge township or a small builder building small row houses. While purchasing property from a builder, it’s quite important to know the background of the builder and the type of properties delivered by them in Past. In India it’s a common practise of delaying the project by one or more year causing a great setback to the investor. This is also important as most of the investors put their hard earned money in pre launch projects trusting the builder without even crosschecking the ownership of the land. For developing such group housing, builder is supposed to get sanctions of the property from the concerned authority including the environment clearance, construction permission and height clearance. One should definitely crosscheck the sale deed of the land in the name of builder and in case the builder refuses to present the document, it clearly shows that project is not well approved.

Another very important point to crosscheck is the penalty clauses in case of delay in delivery of the project and exact possession time. Most of the builders does not mention these points clearly in their builder buyer agreement or manipulate the language of the agreement in their own favour. Apart from the possession related, another issue of price escalation is also a matter of discussion. Once purchased, the property should be escalation free but this is not clearly mentioned in the agreements and many builders use this in their own favour.

Next types of sellers are the individual property owners selling the property due to some personal needs. Such types of sellers are mostly cheated by the property brokers as they are not well aware of the property market. Rather it would be better to say that these are actual sellers to purchase a property at good rate because you save lot of money of brokerage and also you bargain directly with the seller.

Another Category is of the investors, who owned the property long back either in prelaunch or at very low price due some or the other reason. Reason of selling the property by investors is only to gain huge profits on that particular property. Hence they can wait for better deal rather than selling at lower price in hurry. Such Sellers are difficult to bargain and try to sell their property slightly higher than the market price.

Brokers are also one the category of sellers that cannot be missed out of the list. In most of the cases brokers does not own the property, but deal as if the property belongs to them only to build the confidence in front of the buyer. Also their own motive is to earn maximum commission in between the seller and buyer.

COMMON ISSUES FACED IN PROPERTY INVESTMENT IN INDIA

1. There is no proper regulatory body to keep an eye on the working style and policies of the builders. Due to this reason Builders has the monopoly of using their own rules and regulations which are used in their own favour at the time of any legal case.
2. In many cases properties are sold and purchased without the proper documentation and required approvals from the concerned authorities creating legal issues and setback for the buyers.
3. There is huge problem of delaying the completion of the property by builders creating enormous loss to the buyers. No penalty charges are offered to the customers and if offered they are very minimal
4. Rate of interest charged from the customer is much higher as compared to the penalty given in case of delay in property.
5. Most of the property brokers do not have registered offices or companies. Hence if the buyer is cheated, no one can chase the broker until and unless broker is a known person.
6. Due to lack of documentation work, in some cases properties are sold to more than one customer causing litigation among the buyers. Hence it becomes quite necessary to check the original ownership deed of the property.
7. There are endless unauthorised colonies in India where in sale of property is not possible due to no availability of sale deed option. Still the brokers and investors sale these properties using agreements and Power of Attorney. These documents cannot be challenged in court in case of any legal case.
8. There is lack of transparency by the State development authorities against the properties within their zone. It becomes quite difficult for a buyer to crosscheck the ownership of the property from the authority. Bribe is a common issue in these authorities.

Instead of so many defaults, indian market is the first choice of investments for NRIs beacuse of high returns, multiple options and easy deals.

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Dream Home

First home is the dream of every common man present on this earth and each one us wishes to make it special and memorable. Out of the three basic needs i.e. food, shelter and clothing, shelter is the most expensive and difficult to manage. That’s why renting business is always at its peak as most of the people opt to live on rent until they get sufficient funds to build their own property. Owning a home is actually a one time opportunity for at least 80% of the population as it includes the investment of your lifetime savings. That’s why it becomes even more significant to take this decision very carefully after considering all factors.

First of all one has to be mentally and financially prepared before taking a go ahead to your decision. This is a very common factor that usually a person spends at least 15-20% more than the budget planned, which in turn affect the other expenditures. Stay firm to your decision and consider this 20% hike within the budget itself. Apart from preparing financial budget, make sure that you are actually ready to purchase a home in terms of your Job stability and family settlements. It would be advisable to prefer a rented home in case you have plans to move on to other city within 2-3 years.

Plan your search

Once you are ready to search for home in aspect to your financial and mental stability, next action suitable is to filter your choice. There are endless options available in the market and they will do nothing more than to confuse you and divert your mind to a wrong track. Be realistic and filter your options very carefully and then give a go ahead to your next action. Have a look at the following common factors that needs to be filtered.

1. Location – It should be approachable from your workplace, nearby markets and local school and hospital.
2. Budget – Never visit a property that exceeds your budget as it will create higher expectations within you and finalizing a property within the budget will be a complex job.
3. Type of property – It can be 2 BHK/3BHK or Plot/Flat/Villa. It varies from individual to individual and also according to the property rates prevailing in your desired location.
4. Nature of property – This means the property available in resale market or directly with the builder. It is important because price varies of the same property in open market and with builder.

Start your search from browsing the internet once you are sure with the kind of property you are looking for. Gather the list and complete information of all the properties within your selected locality that are available for sale according to your requirement. There are few websites that can help you out in a best possible way like www.magicbricks.com, www.indiaproperty.com, www.99acres.com,www.makaan.com. These websites provide endless options for sale and you can filter easily according to your choice. Definitely you will be meeting the brokers, property owners and sales representatives once you start visiting the property physically and it’s important to have the complete knowledge beforehand to avoid any kind of manipulations by them.

Personal Inspection

Once you have a list of selected properties, visit each property personally and make out all positive and negative points of the property. Try to speak to multiple people regarding each property so that you can get the actual information. If possible, try to speak to few of the existing customers also as they are the best owners to provide you the better information. Feedback of a property is quite important as there are multiple fraud and cheat builders working in the market and brokers are there only to misguide the fresh customers. Make sure that you are purchasing a right property having all legal papers in order and proper feedback from the existing customers. You can visit customer forums online likewww.indianrealestateforum.com to have the exact picture of the property.

After finalizing from the visited property, next step is to negotiate with the owner or the broker. It is quite essential to evaluate the actual value of the property that can be analyzed only after talking to multiple people within that locality. Never show that you are keen to purchase that property, else it will put you on the dominating side and it’s better to keep at least 2-3 options for bargaining. Assistance from any of your experienced friend or relative may add value to your search and will also prevent you from being cheated. It’s a human tendency that everyone is ready to offer you some kind of advice but being a sensible person it is your verdict, whom to listen and up to what extent.

Facts of real estate

It is quite natural that being a fresher in this search you may not be aware of few of the facts that need to be taken care seriously. Do not go ahead only with the outer finishing of the property and flattery description given by the broker. Few of the practical things need to be cross checked properly before submitting the token amount.

1. Finance Available – Banks offer finance facility to only those properties which are legal in all terms of documentation. Crosscheck with your bank representative whether the property opted by you can be financed or not. Always finalize your loan sanction prior to you property decision. It will give you the exact picture of your budget.
2. Black and white money – 70-80% of the transactions in Real estate market involves black money transactions to save tax and registry cost. But it may put you in big trouble if caught by income tax department. Try to stay away from such illegal things as much as you can.
3. Circle Rate – Circle rate is the rate decided by the authority below which registry of a property is not possible. Check out the circle rate of the locality as your property cost should be equivalent to circle rate or above it.
4. Construction Quality – Beautiful colors and attractive design may be eye catching but needs to be checked very carefully. Cement, Brick and steel used in a property decides the age of the property. Poor construction quality is the major problem that most of the real estate buyers are facing today. Check out each and every corner of the property along with fittings and wood work done.
5. Over and above expenses – Most of the buyers miss the part of calculating the expenses above the basic price of the property. Be alert and make estimation of additional expenses that may include maintenance, Repair, Brokerage, property tax, Service tax etc.

Property finalization is a very crucial decision to take but one can convert it into an actual dream home by taking intelligent and wise decisions with the help of proper research and patience.

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