How to Make Big Money from Real Estate

How to Make Big Money from Real Estate

Whether you are an entrepreneur or a working professional, a businessman or a salaried person, today you have a great chance to earn big money while investing in the real estate segment. It is one of the few areas where there can never be a negative growth and hence the opportunities are immense, but you need to tread on this investment path very carefully. We are presenting some tips on our own, read on.

The concept of Appreciation

It is opined by many real estate experts that the most common source for real estate profitability and prosperity is the appreciation of the real estate value. This is defined as the increase in the value of the property that a user has bought in. Appreciation can be achieved in different ways for different types of real estate segments.

Raw Land, Always On

Raw land is always important and has always been the source of wealth creation as it is in demand everywhere and gives great foundation for building real estate projects. It is important to note that it is the great source of appreciation for undeveloped land is, of course, developing it. As geographical boundaries of cities expand, land outside the limits becomes more and more valuable because of the potential for it to be purchased by developers. Then developers build houses that raise that value even further.

And yes, appreciation in raw land can also come as a big surprise from great discoveries. These discoveries can be of great wealth in the form of valuable minerals or materials, provided that the buyer holds the rights. Today, appreciation is also being experienced along the way of big infrastructure projects such as Delhi Metro or creation of IT parks or educational institutes etc. All these factors fan the demand for better living standards and hence, growth of real estate happens around these corners in a better manner.

Residential Real Estate

When people are looking for residential use of real estate, location often plays the most important part in their selection process and hence, creates a big impact on appreciation as well. As the nooks and corners or the neighborhood around a residential project evolves, emergence of schools, shopping centers, transit routes, parks, stadiums and so on, the value of the project and the locality also moves up.

Additionally, residential improvements can also speed up the process for real estate appreciation, and this is something a property owner can directly control. Putting in a new garden, or bathroom, remodeling to an open concept kitchen are just some of the ways a property owner may try to increase the value of a home, almost instantly. Many of these procedures have been refined to high-return fixes by property movers who specialize in adding value to a home in a short time and helping people in terms of making more money in a short span of time.

Finally

We have presented you some of the most trusted and verified ways and means to increase the value of your property and create better chance of wealth creation in a shorter span of time. As far as Delhi and the NCR region is concerned, today is surely the time when there are a great deal of chances in terms of residential projects that are ideally poised to deliver better and bigger returns on your real estate investment.

5 Critical Mistakes people make when Buying a Home, How You Can Avoid Them?

Critical Homebuyer Mistakes and How You Can Avoid Them?

Buying a home is a great dream that many of us have. However, it is always advisable to move cautiously and do not make mistakes while you go for buying your dream house. Here are a few tips from our side.

Buying a Bigger House than you need and afford!

It is good that you want to have that extra space for your home, but one should always keep in mind the affordability factor while looking for such long time investments. Hence it is always advisable that you settle for something which you and your family can easily afford for a loner time period. Remember that it is you have has to pay the EMIs to the bank, so it is always better that you fully understand your financial boundaries and freedom as well as limitations.

There is no need for you to unknowingly “open the door” to dark future and embarrassment by getting a home loan that you cannot afford on a long term. We recommend that you settle for a nice and comfortable property that is just ideal for you, financially as well.

Thinking “short-term”!

As most of the experts in the trade believe, investment in property is always a long term plan, hence there is no need for you to look for short term gains.

You should never think on a short term basis. Life should be taken seriously and always given a long shot, towards your big goals. Hence, look for long term prospects while settling in for real estate investment.

Are you waiting for the “bubble”?

This is unfortunate and another wrong thought. There are people who wrongly prefer to wait and see the bubble burst. This is surely not advisable. Hot markets come and go, similarly, cold markets come and go. Markets become over-priced, then over-time become under-valued. If you are waiting for a severe correction in real estate prices, then it is not a good idea, because you might be waiting a long time.

The best time to buy a good real estate is always when you are in good shape, both physiologically as well as financially. This means that you need to seriously look at making such investment ideally while you have a stable job and when you do not have any major liabilities on your pocket.

Selection of a real estate agent

This is a very important and an integral part of your real estate investment deal. It is always better that you go with an agent as it a safe way to make sure that you go get a transparent and completely organised way to complete the real estate acquisition process. However, you surely need to check the credentials of the investment agent before signing him on assignment.

You must contact different agents in order to make sure that you are getting the best. Ask questions and then trust your instincts as to which agent is the best one for you.

Overlooking Location

This is another important mistake that people do. One has to always remember that location of a property is one of the most important criterion for selection. Hence it is always advisable for you to clearly look at the location factor and ask some of the below questions to yourself.

How far is the property from schools, shopping complexes? Is there a medical center or hospital nearby? Is there any metro station close to the property? Answering these, would surely give you a clear idea about the positivity about the location of such properties.

How to make your money work for you?

How to make your money work for you?

As you start your quest towards investing your savings, there are some important rules you should follow. We are presenting some of the important guidelines which are sure to increase the value of your investment over time and make your money work for you on the long run.

Right Investment, all about Goals:

First, you have to decide on your investment goal. Decide what it is that you are trying to achieve from this investment. What is the final outcome that you want from your investments and what is the timeframe that you are looking at for your investments? You also have to think about debt – is investing the right option for you right now? These are some of the important questions that you need to ask yourself internally while making your investment call.

Risk Assessment:

While doing your investments, you need to know what type of investor you are – essentially, how much money are you willing to lose? How much volatility can you withstand? All this information will help in terms of determining your risk assessment for your investment.

How you want to invest your money:

You must understand, what mix of investments suits your investor type? Bonds, shares, property, bank deposits? Will you invest directly yourself or use managed funds? All this helps in terms of determining your investment style and hence drive better results for your investment. This surely results in your money working for you in a better manner.

Homework is Important:

Homework is always important and this will help you derive better returns on your investment. Hence for this you have to research, compare and contrast everything – or get someone to do that for you. Read the business sections of the newspaper, go online, talk to your adviser, bank manager, or accountant.

Research different companies’ investment options:

If you are going to invest directly in a company, find out which companies suit your type. Do they offer the kind of investments you are after? What are the rates of return for each investment? What is the level of risk associated with the return?

Spread your risk:

It is never advisable to invest in only single direction. Hence, you need to spread your risk around different options and different companies. Just as an example, if you are looking at high-risk investments, you can balance your risk with other investments in lower risk areas, such as bank deposits or cash and bonds. When you are looking at your money to work for you, you have to follow the above set of guidelines and prosper ahead.

Assured Returns, but at Your Own Risk

Real estate experts do agree that consumers should invest in assured returns projects at their own risk

Designed, exactly to match your vision and deliver wealth for you and your family, there are full-page advertisements, billboards at prominent locations, and even TV commercials offering you a juicy 12% per annum “assured” return on an upcoming residential or a commercial project.

This is a tricky situation, especially at a time when we are going through a topsy-turvy equity situation and high inflation is reducing the real return on even bank deposits, in such a situation, offer of a 12% return on a long-term appreciating asset like real estate sounds too good to be true, actually.

So how does assured returns schemes work?

If you buy in too such an assured return scheme, you buy a property outright – even when the completion of the construction is two or three years down the line – with either your own funds or a loan from a bank. For instance, is you pay Rs 1 crore for the flat. During the construction period, you get Rs1 lakh a month that is equivalent to 12% per annum of Rs1 crore – through post-dated cheques the builder gives you.

Most interestingly such schemes also provide with an option that once you get the possession of the flat, you can either exit the project or continue with the agreement, but the terms could change as the property will be leased out to a tenant and the developer may share the rent with you.

This looks fabulous but there are some unanswered questions

So the big question is from where is the developer giving a 12% return to his customers?

According to experts, in such a situation, the yield from residential housing is usually in the band of 2-6%. That means the annual rent as a percentage of the capital value is about 4%. And in such a scenario, a Rs1 crore property should get a customer an annual rental of about Rs 4 lakh a year or Rs 33,000 per month.

And hence the big question of how is it that the builder is offering you a return that is three times the rental? There is obviously some other story at play.

Well, here is the inside story, experts in the real estate business opine that when the absorption levels in real estate projects have deteriorated, there is an increase in inventory across prime real estate markets. Hitting them hard, the excess supply is making some developers less creditworthy in the eyes of the banks and private equity (PE) that traditionally funds their business. This is prompting these developers to look for other funding options, such as getting hold of bank finance but routing it through you, the buyer, because you get the loan at much lower rates.

As expressed by most of the business insiders, this is surely a measure taken in desperation to raise economical money from investors and buyers. On the other hand, if the same developer looks for a financing option from banks, the developer would get the money at a high cost (at a rate of 14-15%). Thus for him, getting money for 10-12% means cheaper financing.