Arjun Nagpal, an entrepreneur of 45 years in Delhi, is desperate to invest in a luxury apartment but is attacked by uncertainties on many fronts. Should he invest now or wait for some time? Has the property price reached the lowest value or could they rise? Everyday he reads advertisements in the newspapers from developers offering heavy discounts or free gifts, each apparently more attractive than the others. This storm of offers & discount has left Mr. Nagpal puzzled. How should he go about judging their real value?
There are so many confusions related to the taxation & insurance come with the purchase of the home, all of which she get puzzling. Like Mr. Nagpal, many first times home buyers particularly in residential properties in Gurgaon want to buy a property now but also confused due to the abovementioned, and many other, doubts.
In this article, we give the necessary information, tell you about the many drawbacks that you should ignore, and also present a complete set of information to assist you to take most expensive and important decision of your life.
1. Don't wait for price to correction
With recent currency demonetization from Central Government, RERA Guidelines, the upcoming budget that will have numerous positive provisions for the real estate sector, and the excellent GDP growth, the sentiment in the realty market may improve. So, invest in a property right now. Property value has already bottomed out. Since the speed of transaction became slow due to the shortage of currency, developers are still offering heavy price discounts and other freebies. Once the sales lift up, they may pull out the offers.
2. Don't look forward to quick gains
Those dealing in real estate now should not look forward to immediate price rise over the next few years, the main reason is price have already amplified at their threshold level in cities like Mumbai and Delhi NCR.
Another reason that will stop prices from appreciating is the same (currency demonetization), as it has usually seen a very high contribution of black money and cash transactions in real estate and Central Government block all these practices in any manners. Even if sales have slowed down, real estate developers keep launching residential project because they have already invested big amount on land bank and need to earn some profit. So, if you are buying a residential property, have an investment perspective of at least five years or more.
3. Factor in borrowing costs
Home loan interest rates are now in single digit in comparison of the year 2011 – 12, but still high for the salaried class people. A mixture of factors, counting high prices of residential apartments, high interest rates on home loan and sluggish growth in income in metropolitan areas has made it hard for the individual to buy a residential property. People who are buying property for investment point of view must go with the truth that even as they will have to give approx 9.3 per cent interest on the home loan, the present uncertain condition in the real estate sector signifies that the property price may not increase , or may experience a single-digit amplification. So your net gain possibly negatives in the short time span.
4. Buybacks can be risky
Many real estate developers are finding it complicated to get loans from the banks. So they make investors as a medium to get the loan by offering them buyback schemes. According to the real estate experts, the yearly returns are 20 – 24 percent on schemes like buyback and assured return. What the reason behind these offers? First and the main reason behind this offer is, the builder is in financially weak condition, and lures the investors to invest in the project with advance capital. Second reason is only a win-win condition for both builder and buyers, in this condition, developer assures that in the set time frame property value will rise and then the investor can sell the property with high return in the market and the developer will not have to buyback the property.
But what if this not happens as assured by the builder? In that case, the builder will have to buyback the property from the investors. Is it possible for the builder? Maybe they go back on their promise, and in that case, investors will be left with no choice but to go to the courts, which is not a pleasing way for most investors." If you settle on to go with this type of offers, then check the financial status and history of the developer.
5. Check the proximity from Social Infrastructure
Always check that the property you are going to buy in is close proximity to the social infrastructure you need for comfortable living, for example, retail stores, public transport, gardens, hospitals, schools, community center, club, etc. – A priceless tip if you want to save some time.
6. Check the traffic movement nearby
Especially if you are going to buy a residential property for the living, check the amount of traffic passing through nearby your home – will it be loud at peak hour? If is it so then this can affect your lifestyle, especially for senior citizens.
It is the best idea to arrange an examination of the development during the sunset or during peak hour traffic sooner than you agree to the buy. – Not only traffic, if your apartment is nearby bar or liquor shop, in that case, people get drunk at night and make noise and disturb you.
7. Maintenance Charges & Hidden Cost
Most of the people are not aware of the maintenance charges & other hidden costs that come with the living in a gated community. Not only maintenance charge but you should count other tax like the municipal tax, property tax, water & electricity connection charges, security, assessment tax etc.
8. Car parking
Mostly these days everybody has their own car, in that case, you must be an important question to think about. Car parking available or not if available do we have to pay some charge for this. If not then ask your secretary of the society to allot a parking slot for your vehicle. Many villas community in Delhi NCR offering car parking within the boundary of your home, like Godrej Golf Links Villas in Greater Noida.
9. Before buying be a seller
Before buy any residential or commercial property, examine the market condition to make sure you are getting the right value for money. Speak to independent sellers and real estate agents, and verify current sales in the region. Don’t depend on the suggestion from the builder or their dealers. This is very important if you are buying off the plans. You want to know that the value of the completed home will reflect as a minimum what you paid.
