How do I start investing in Real Estate?

Many a times, the biggest challenge in investments is knowing where and how to start. You may have an abundance of funds and a keen desire to start, but if you don’t start at the right place and in the right way, chances are you’ll end up with a bad taste. One must have a long term strategy to invest in real estate.

The one question that we get asked the most by our patrons is : “How do I start?”

We are sure that this is running through your mind too and to help you in this regard, below is a series of steps which will brief you on how you can start off on your journey of wealth creation :

1)  PURPOSE of Investment : The first question you need to ask yourself is whether the investment is for self-occupation for you and your family or is it a pure investment for capital gains?

2)  LOCATION of Investment : The second step is to decide on which city you want to invest in. This may depend on your purpose of investment because if you are looking for a property for self occupation, the LOCATION becomes very important and specific. On the other hand if it is a pure investment decision, then you have a number of options to choose from as opportunities for growth are spread across multiple locations.

3)  BUDGET & TENURE of Investment : Once you have figured out your purpose and location, the next logical step would be to decide on how much you can invest and how long can you stay invested. This would also mean working out the amount of time that you would need to bring in the entire budgeted capital (which could range from a few weeks to a few years). The longer you can stay invested, the higher returns you will make and vice versa.

4)  LEVERAGING DEBT : As we always say, the smartest way to create wealth is by leveraging the power of DEBT. By leveraging your salary slip / business financial credentials, you can enjoy appreciation on somebody else’s money! For example, a person with investable funds of Rs.50 lakhs, can actually purchase properties worth Rs.2.5 crores by taking a home loan. This way you will enjoy appreciation on property worth Rs.2.5 crores whereas your investment is just Rs.50 lakhs.

By the time you are done going through each of the above points in the given order, you will have a basic overview or understanding of

1. HOW MUCH of your own capital you have to bring in.
2. Time span over which this money has to be brought in (generally 2 to 4 months if it is pre-launch property).
3. How long you will have to stay invested.
4. The average percentage of returns that you can expect.

Once you put down all the above on paper, you will have a concrete investment strategy based on which you can start short-listing properties that meet or suit your investment criteria and strategy as above.

Read our post on “Investment Options for You to Get Started” to know how you can proceed from strategy to the next step.

To know more about the latest wealth creation opportunities across all leading cities of South India, click here.