Read This Before You Invest on a Real Estate Property

Sujan Afi S

The Story

It is often said that the amount you spend to build a house is a lifetime investment. This is not just a general statement. It carries within itself a lot of emotion, besides your hard-earned money. Some people save a little from their little income so that they can have their own house.

Having a house can also generate you some income. How? You can sell the house later on at a higher price. Generally, the price of Real Estates tends to rise (except in case of some unavoidable circumstances/mishaps). A house can also generate your rental income and the like. Thus, there is no doubt that investing in a Real Estate property (like a house, building, etc.) is an option that you can make.

Now, a question can arise in your mind. Is there any risk in investing in Real Estate property? Risk is there in every decision you make! Life is quite unpredictable. You can never be 100% sure in gaining from every decision you make. Can you?

So, in this article, I will show you some perspectives that you can weigh before you invest in a property, be it a house, a building, an apartment, etc. So, let’s get in!

A General Discussion

It is a myth that the price of a Real Estate property will always rise. Generally, the price increases. But there might be certain circumstances when the price might decrease too. For instance, the market value of the property had decreased in some parts of India in 2020 due to the sudden outbreak of Covid-19. The price of a Real Estate property is dependent on several things like demand and supply, the economy of the country/region, the policies of the government, etc. Hence, you can do exploratory research before you decide to invest your money in a property.

So, you finally decide to buy yourself a house. You didn’t decide in one day. You have thought over it, have consulted with the elders and friends, have acquired some money, etc. Only then you have finally decide to invest. So, the entire thing is not a plaything for you. It is a decision that will affect you for a long time. Thus, you would never want to have a house that will not pay you back in a long run. Thus, the location of your property is very crucial. Several other things are dependent on the location of the property. For instance, if you want someone to stay in your house as a tenant, your location should be such that will be beneficial for the person. It is quite obvious that a house that is near the bus stop/station, local market, hospital, etc. will attract more people than that situated in a distant area. Further, the price of a house situated in the heart of the city will be higher than that which is located in the outskirts of the city.

So, if you want to incur some profit, try to buy a property that is located in a good area.

Negative cash flow happens when the cash is left after paying all costs, charges, and home loan instalments. Negative income happens when the cash coming in is not exactly the cash going out—which means, you’re losing cash. The most ideal way of diminishing the danger of negative income is to get your research done before purchasing a property. You can set aside the effort to precisely work out your expected pay and expenses.

Relax, maintaining everything is an art that you will learn gradually. You can not expect to be an expert in maintaining the cash flow in one day!

Now, to maintain the cash flow and adjust everything you can keep a specific part of your house for the tenants. It is no doubt that you can generate a good amount of money from your tenants. There is no doubt that there always remains a risk of the tenant defaulting or the tenant might leave the house early. What you can do is, you can sign an agreement with your tenant and also take some safety deposit amounts from your tenant. You can always find an individual(s) whose major income comes from the rents paid by the tenants. Thus, a Real Estate property can give you a stable income for your entire life. As said earlier, the rent paid by the tenants might vary according to the circumstances.

Now, if I consider you to be a person who has bought a house, then you are a person who will feel secure financially. Why? Because you know that you have an asset that you appreciate and value too. You know that you are the owner of the house. You know that you have a roof above your head. You know that you can sell it if the circumstances are so. You know that you can put it on lease. You know that you can pass down the property to your future generation. Thus, you will feel safe, secure, and confident. This is the main reason behind everything that we invest in!

Also Read: 15 Real Estate Insiders Share Their Tips For Buying Your First Investment Property 

Conclusion

There is risk in everything. Still, we can not just sit in fear of losing the things we have. We have to undertake risks to gain something. It is worth weighing both sides so that you understand whether the risk you are undertaking is worth enough. It is no doubt that investing in a Real Estate property is risky. Because it is a big investment. There is no way to eliminate the risk. Nevertheless, you can consult with an expert in the Real Estate market before you invest. Roodland India is the right guide for you in this regard. We have a group of experts who can guide you in the right direction while buying a property. You can contact our experts by dropping a mail at info@roodland.com.

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