Tips to make money in real estate in 2020

Jan 22, 2020

                                           trueseed | Corporate Leasing | Dipakk Vadehra |

Tips To Make Money In Real Estate In 2020

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Author: – Dipakk Vadehra | Director | Leasing & Investments| TrueSeed


Amidst a period of deliberate slow traction and consolidated sales for systematic revival, Indian real estate has plenty of avenues to invest in. All you need is the right mindset, proper financial discretion, a knack for identifying scruples in legalities and some of the following helpful tips and tricks.

The real estate industry is witnessing an era of revival after the last few years were full of turmoil and buyers’ scepticism. The Government introduced myriad recuperative measures in the form of policies, bills and reforms such as Demonetisation, the Real Estate (Regulation and Development) Act (RERA) and the Goods and Services Act (GST). Additional ancillary reformatory measures such as the Unregulated Deposit Schemes Ordinance, Benami Property Act, the formation of National Company Law Tribunal (NCLT) and more events such as the liquidity crisis of the Non-Banking Financial Companies (NBFC) and Housing Finance Companies (HFC) were also instrumental in the real estate renaissance.

Once the real estate sector absorbs the shock waves of the transformative reforms, it may witness growth now in the year 2020. The Union Finance Ministry would attempt to combat the prevailing liquidity crisis by introducing Alternative Investment Funds (AIF) for stalled projects, boosting the ‘Housing For All’ mission, revising income tax slabs, reducing the GST on under-construction projects, and granting infrastructure status to affordable housing. The consolidation of the housing industry, which would lead to more credible and established property developers taking over the smaller players and their projects, would also give a fillip to the sector. Moreover, new and more relaxed Foreign Direct Investment (FDI) regulations leading to higher FDI inflows would impact the real estate industry positively.

Now that we know that better times are in the offing, it is essential to understand how do the large and mid-size investors/investor lobbies /individual investors make the most of the current situations and invest their hard-earned money the right way and in the right market.

Tips to make money in real estate

  • Be very clear and specific with your property goal, i.e., what is it that you are eyeing – growth or rental yield or both and in how much time.
  • Before investing, be mindful and know the whole 360 degrees of the strategy undertaken by you, whether it be house flipping, buying and holding, subletting or pre-leased investment property acquisition and the taxation part of the all these endeavours.
  • Based on your goal, choose between residential and commercial property, whichever is more aligned with your corpus amount and bank loan eligibilities.
  • Take more time and research both online and offline opportunities well, and choose wisely from already established high growth areas to growth corridors in close proximity, depending upon your strategy.
  • Physically examine all the properties and ensure that you are getting what you are being told, i.e., the difference between carpet and super area is clearly laid out for your perusal.
  • To negotiate well, you need to have a comparative analysis of the similar properties in the area and, while researching, make sure this comparison is given priority.
  • Have a clearly and fully-defined exit strategy and assess all outcomes before investing.
  • Documentation is a must at every stage, from token to earnest money, the agreement to sell and the registration of the property. Hire an advocate for the same.
  • Once the property is acquired, be prepared for the next stage of the strategy and henceforth, continue reaping the tax benefits from the same.

Pitfalls to avoid before investing

  • Clarity of goal setting, i.e., if you are planning growth or rental yield; prioritisation of these aspects will let you choose wisely between the available property types.
  • Researching, corroborating and depending upon numbers is a raw game plan. Please do thorough research with clearly laid out comparative analysis of similar properties.
  • There are no free lunches, i.e., no developer will let you ride on freebies unless the property is lacking in some way – low yield location, bad construction quality or financial issues. When choosing a property, verify the basics – location, accommodation, services, infrastructure, completion certificates etc.
  • Demand proper documents with relevant information, rather than what is being said to you by the middlemen or the developer. Make sure to hire legal help.

In the domain of real estate, you must be shrewd in making deals because even though the all-seeing RERA has weeded out unethical activity to some extent, you may never know when you might get swindled off all the money that you invested. Follow the above steps and consult with legal experts and real estate consultants.