Deciding to buy a home soon? You might want to read this article until the end!
Home buyers in India are faced with several hurdles that if not skipped in time can cause the home possession really messed up. If you are going to make your first real estate purchase, these are some points of note, you must bear in mind, to make the transfer as smooth as possible.
You should also take care of the fact that between the time of you making the payment and getting the house registered to your name, there are several laws that operate separately for you, the buyer, the seller and the lender. Hence, prerequisite knowledge is a must.
We feel this is a mentionable point as most of the home buying transactions in India involve some amount of loaned money. If your loan amount makes up 25% or more of the total property value, you must choose the loan scheme very carefully.
It is advisable to consult a property broker or a loan officer who can guide you through various loan products available in the market.
In India, about a significant majority chooses the wrong loan plan for them. In some cases, people settle for the initial low rate of interest and sometimes they take the loan for too long a tenure. All of these mistakes can land you in wastage of money in future and can make it hard for you to pay off the loan as you plan to.
This might feel like an obvious fact but it is egregiously important to inspect the house once before finalizing it. In many cases, people try to pace up the transfer process in order to discourage you from inspecting the house thoroughly.
This can leave you in discomfort later on. If there is a fault with house’s roof, electrical wiring or drainage, it will continue to haunt you for a long because these are hard-to-fix problems.
So, make sure you inspect the house thoroughly. You may hire an inspector as well, who will make it a lot easier for you to peacefully finalize on your favorite home.
This is a big woe that comes in the shape of merry news. Sometimes, loan lenders or financers give you a green flag for properties that are evaluated at a much higher price than your ITR depicts.
You are bound to rejoice this situation and quickly sign-up in haste. But stop right there. Don’t underestimate your budget just because you are getting a bigger amount sanctioned. Calculate your income capacity accurately and settle for the EMI amount that doesn’t get in the way of your income.
For many people, the teeny bit of realtor’s fees seems like the most avoidable thing in the world, but it may become a loss of lakhs of rupees.
If you are a new to home buying, the realtor is your best friend. Realty firms help you at several stages of the deal. You being the buying party can’t rely only on the seller’s agent.
No matter what, at the end of the day, the seller’s agent will act for his client’s profit, which is why having a consultant at your end will help you dodge any petty trick being played on you from the seller’s side. This happens a lot in the real world and you must prepare for it nicely.
“Mumbai is infectious. Once you start living in Mumbai, working in Mumbai, I don’t think you can live anywhere else.” -Yash Chopra.
I find this quote very true!
It connects to all the Mumbaikars out there.
From being the habitat of the most expensive residential property of the world, Antilia, to being the hub of unbelievably cozy places, Mumbai has it all.
Well, I would say living in Mumbai is adventurous and transforming.
Trust me, Mumbai is sorcerous.
Getting to the point here,
This article is targeted for the people who are looking forward to investing in Mumbai’s real estate anytime in the future.
And, even if you haven’t thought about it, you still can evaluate the pros and cons.
So, here we go…
Mumbai is one place which still has a huge influx of people from across the country. Hence, prices increase constantly every year.
Not so much. But, still.
Therefore, if you plan to make an investment, do that in Mumbai.
The rental rates are high, plus, after 3 years you can sell the property of and get great benefits.
Mumbai is the best city in India for commercial real estate investment, with returns of 12-19 per cent likely in the next five years, followed by Bengaluru and Delhi-National Capital Region (NCR).
Recommended post: Reasons to buy a property before 2017 ends.
When the talent is driven into the city from across the country, there is indeed, huge exposure.
With the establishment of IT industry, and being a Bollywood hub, Mumbai became a magnet attracting thousands of people every year.
Whilst, the city is rather safe, one of the reasons is the great police and even, there is great awareness among people. Moreover, the city never sleeps!
Mumbai shows 17% of vacancies approximately in office market according to a survey.
And, the city is well connected as well.
In terms of both commercial and residential properties, Mumbai is the best.
Having to be stuffed with opportunities and talent, the city can bring great boons.
Mumbai is one of the biggest hospitality markets in India.
Well, it is expensive.
You can say a lot.
But, I believe it gives the person many opportunities to carve a decent living.
The average cost of living in Mumbai ranges from 23000 INR to 50000 INR.
Traffic, pollution, and population are some interconnected problems in the place.
However, this is an issue with every place of this country. Whilst, Mumbai being the city of dreams makes people addicted to it.
Pollution index of the city is 86.70% according to a survey.
Must Read: Reasons for not purchasing a property.
Because, of the Indian ocean, Mumbai has a weird climatic condition. Wikipedia has provided a detailed description of the weather of the city, Mumbai.
Some people find it difficult to adapt it.
In my opinion, there are cons to everything.
Wherever you establish a life in, you definitely need to make some adjustments.
To improve your odds, you can rather make that huge investment worthy. Focus on what matters and your personal priorities!
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When moving to Mumbai, the most important decision is to identify the location of your new rented accommodation, irrespective of whether you are moving with or without your family. Many professionals locating to Mumbai without family assume that they can crash land and survive anywhere in this city. But the equation is not so simple especially when it comes to settling in the Maximum City.
Before you start finding and shortlisting apartments on rent, here are some do’s and dont’s which we hope helps you in making the right decision while selecting the location.
Where is your work location? Is it in South Mumbai, Western Suburbs, and Central Mumbai? You can find flats on rent in Mumbai anywhere and everywhere, but consider daily commuting that will become a part of your life as a Mumbaikar from the day you join your office. Choose a location which is closer to work so that you can save your energy and travel time. If rates are higher than your allocated budget for rented property, then you can consider settling down in the surrounding areas. For example, if your office is in BKC, you could find accommodation in Bandra East, Tilak Nagar, Kalina,etc.
While you would travel to work, if you are moving to Mumbai with your family, then your kids would travel to school or college. There could be a trade-off between the proximity of your rented premises to your office vis-a-vis how close you want your home to be to the college or school that your kids would be attending in Mumbai. But the point is same- travel time.
Find out how safe is the neighborhood for you and your family. In Mumbai, within the same area, you will notice that sometimes even within the same locality or area, the world changes between two lanes. So it is advisable that you personally go with your real estate agent and take a quick scan of the immediate neighborhood yourself. Other than safety, check the facilities and infrastructure available in that area including but not limited to healthcare, shopping, restaurants, entertainment, etc.
It goes without saying that do your due diligence in identifying the running rental rates in and around the residential areas which you shortlist. Hire a trusted real estate consultant who would educate you about the city. Alternatively, you may also check the reckoner rate for those areas. Reckoner rate is an official rate varying with areas, properties,etc and it serves as a good benchmark for property buyers and sellers.
This point overlaps with first three points- proximity to work, education centre, entertainment, medical facilities and shopping centers to say the least. But since we are talking about Mumbai where travel time is not calculated merely by distance but also by judging the state of traffic and time of the day, so we think connectivity deserves a special mention here. Local trains are the lifeline of Mumbai, but at the same time it is not everyone’s cup of tea and especially not so easily acceptable by outsiders moving to Mumbai. Unlike Delhi, Mumbai goes straight, so does the road connecting one end to the other along the coast. Roads are not very wide as one would expect from a flourishing metro, hence frequent traffic jams. So connectivity is an important aspect which you must evaluate before you sign the rental agreement with your new landlord!
People moving to Mumbai must consider short listing the location even before looking at properties on rent. Take help from your property broker to understand the city and at the same time explain him the types of residential areas you would prefer. That along with the proximity to work and other facilities must be considered well before even you start meeting prospective landlords.
Before analyzing whether to invest in commercial or residential property, it must be understood that property is a long term investment. Any investment which is done on long term horizon must provide for at least two things:
1. Regular Income
2. Capital Appreciation
Over the past decade or two, investment in residential property has given high capital appreciation while fetching very poor annual rental returns. Residential rental returns are in the range of 2.5-3% pa while bank interest rate is 8-9%. But whether investment in the coming future will continue to fetch high capital appreciation is a big question mark. With rentals remaining poor in residential property, it’s doubtful whether investment in residential property will remain attractive.
The growth in housing prices has slowed down for the sixth consecutive quarter in India if one considers the RBI’s housing price index which was recorded with lowest growth in 2016-17. If we look at Mumbai in particular, Knight Frank published a report in July 2016 according to which although housing project launches have been at 3-year low in top 8 Indian cities because of huge unsold inventory, but 29% increase was posted for new launches in Mumbai in this period.
Commercial property being barometer of economy follows the economy indicators. Weak economy results in subdue property prices resulting in poor capital appreciation. But commercial rental returns are relatively better @ 6-7% though lower than the desirable rate of 8-9%. This scenario seems to be changing with new laws and investment instruments like REITs being put in place. With economy also expected to show upturn, it’s expected that commercial property will give better rental returns with reasonable capital appreciation possibilities.
Demand for Grade A offices has increased in prime Indian office space markets including Mumbai’s Bandra- Kurla Complex, New Delhi’s Connaught Place and Bengaluru’s MG Road. In fact, HNIs and rich investors are increasingly showing interest in high-ticket office space in India which gives them high rentals and good appreciation. Low vacancy rates in these prime markets are expected to cause further growth in rentals.
To conclude, in the coming time, it may be better to invest in high quality commercial property.
Spacio Realtors is the Mumbai residential and commercial property specialist. The company’s core function of Buy-Sell-Rent is accompanied with consultation in real estate investment opportunities, managing client property investment portfolios and even tax & legal advice on property related matters.
Have you identified the most important set of documents that you need to buy a resale flat in India?
Have you had trouble finding out from where to procure these documents and whether they are mandatory to proceed with the deal to purchase the resale property?
In this article, I’ll list out the legal documentation requirement that a home buyer must add to his or her priority checklist and also communicate to the selling party so that there are no delays in the transaction.
Round-up: Remember, you don’t want to get stuck with a property for the rest of your life that doesn’t have clear title or any other missing legal document that prevents you or your children from reaping the benefits in the long run. Due diligence is required when buying a property, but instead of getting overwhelmed by a long list of paperwork create your document checklist or hire a property consultant to guide you for the same.
Connect with one of our experts. We look forward to helping you with your real estate needs.
It is a major decision for everyone. So it’s imperative that the decision to buy property is well informed and adequately researched. More so, in Indian context, where the real estate sector is inadequately regulated and opaque.
As one start looking around without structured parameters, the confusion compounds.
Below are some major pointers on which one must deliberate before buying a property:
The first and foremost thing that one must be clear about is that purchase of property is for self use or pure investment. Because if the decision is, let’s say, for investment, only then the location or area doesn’t matter as much as the builder, delivery, scope of capital appreciation, rental values, hidden cost etc. matter.
The most obvious point to consider in any purchase is ‘What’s my budget to buy property’. Market is full of options. Before one goes out scouting, it’s important one has fair amount of clarity about the money one wants to invest in property as it would reduce confusions, impulsiveness and also help in sound financial planning.
After evaluating ones needs & desires, it’s important to limit range of area where one shall like to buy property especially if it’s for self use.
Once area is decided, one must now further short list the location by looking at it’s neighborhood (Slums is major issue in Mumbai) and infrastructure in terms of connectivity, safety, markets, school, medical facility and future development plans etc.
Both old and new construction have their own set of plus & minus in terms of quality, amenities and price. Also urgency of need is important factor in case one looks at under construction property.
It’s important to know who is the builder of the particular chosen property. It’s important to do background check of the builder because quality of construction and commitments depend on builders’ reputation. Reputed builders will always command premium. But that premium remains always attached to the property.
The type of project has lot of bearing in terms of pricing, infrastructure and neighborhood. Clear plot project will always command premium and is worth it.
Before making the final decision, one must look at the title of property and whether all Govt. approvals are in place. It’s always advisable to take a legal advice though it may have some cost.
Related Post: Documents required to buy a resale flat
Especially in under construction or new projects, delivery is an important factor. Giving a grace of few months, the property must be deliverable as per schedule. Delivery overrun also has adverse impact on cost of acquisition in terms of cost of funding etc.
One must ensure that funds to buy property are fully tied up and well planned.
Now-a-days, property developers are offering attractive schemes of payments. One must ask and check such schemes but ensure that they are genuine and not sugar coated pills which ultimately harm the buyer of residential or commercial property.
Buyer must read the property deal in detail and minutely to check it doesn’t have hidden costs and restrictions in term of maintenance, transfers, escalations etc.
It’s good to know beforehand what’s going to be recurring cost in terms of property taxes, maintenance and society rules etc.
Connect with one of our experts. We look forward to helping you with your real estate needs.