7 must-know facts about property investment for beginners in India- Indepth Property

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7 must-know facts about property investment for beginners in India





1. Real estate is locally driven

Property investment is influenced by local metrics. The real estate market of India, for instance, is entirely different from the US market. Even within India, the property market in Uttar Pradesh and Haryana have their distinct features. Further on, within Haryana, the real estate markets of Gurgaon and Sonipat are not the same, despite their many similarities.

2. Real estate is a long-term proposition

If you are investing to make quick bucks, real estate is probably not your thing. Value appreciation takes a while in real estate. If you invest in a plot in an upcoming locality, it might take several years before the sale offers you tremendous gains. Nothing changes in real estate within months.

3. Real estate needs legal & financial understanding

While real estate developments have largely been unregulated in India, something that enabled investors to save on taxes, in the past half a decade, several rules and regulations have been enforced to curb the misuse of real estate investment in India. Beginners planning to invest in real estate, and build a fortune in their venture, must have a broad understanding of all these laws. Some of these laws include the RERA Act, the Benami Properties Act, and the GST Act.

4. Get assistance                    

While research and development are important for a beginner aspiring to make it big in real estate, they may not always be sufficient. Because of the legal and financial complexities involved, a rookie investor is better off with some help at hand. Seeking assistance from lawyers, chartered accountants, and property brokers is as important as delving deep into the basics of real estate investment in India. As is true of any subject, there is only so much that books can teach you; a large part of your knowledge comes from the experts you meet along the way.

5. You need more seed money in real estate than any other asset class

Newly initiated instruments like real estate investment trusts and infrastructure investment trusts offer low price points. However, real estate, as such, does not offer the freedom to start with negligible money, unlike stocks and fixed deposits. One must have a substantial amount in the account to take the plunge. It is hard to quote a definite figure, but local factors are the key determinants of the initial capital. It is safe to say that nothing below Rs. 10 lakhs would be appropriate.

6. Be mindful of tax implications

As is true of any income, you also have to pay tax to the government on profits gained through real estate investments. Taxes may eat into the gains made through property investments. However, various laws assist in lowering tax liabilities. Find out the legal ways to lower tax liability on real estate income.

7. Know about additional monetary burdens

States earn a large part of their revenue through stamp duty and registration charges on property purchases. These taxes substantially increase the cost of property investment. Factor these in while planning the amount of investment.



Author : Amandeep Singh Rekhi

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