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.

Why Invest in Gurgaon India

The Magic called ‘Gurgaon’

When we talk about real estate segment, Gurgaon surely has its own magic today.

With its close proximity to the Delhi and a lot of IT and communications companies coming to invest in the city, Today Gurgaon is surely the dreamdestination for the real estate investor. And yes, the experts are touting it to be the next industrial hub, the residential heaven and developmental true millennium city.

Gurgaon is the happening place at Delhi’s close proximity corner. It is also creating great opportunities for people coming to the capital region from different corners of the country. Additionally, the Haryana government is doing all it can to make the best and brightest of all tier two and three cities in the country.

Today, the city holds the greatest promise for business, recreational, hospitality and residential sectors. This is on its way to becoming reality – the government and immense private investment is surely coming into the city from different directions. People can travel in all directions on six-lane highways, and live in great looking condos, bungalows or flats. The city has some of the greatest malls, eating joints and great restaurants. All this is surely going a long way in establishing and increasing Gurgaon’s real estate value and supremacy today.

Come to Gurgaon and practically all the big industry names will be your neighbors, and you will walk along leafy and plush avenues, play golf on pristine courses, manicured greens and swim in gorgeous pools. In a nutshell, if you are looking to invest, Gurgaon is undoubtedly the place the place of choice to invest today.

What is prompting growth in Gurgaon’s real estate?

•Absorption of large office spaces by global giants

• Global Standard office complexes developed by leading Real Estate Companies

•Amazing Residential Complexes at competitive prices

•World Class Malls, Medical Facilities, Education etc.

•Improved Road connectivity with Delhi

•Metro connectivity with Gurgaon

•Price differential of properties vis-à-vis South Delhi