Things to consider before purchasing a house – as a resident versus as an investor

Purchasing a house – whether for residence or investment – has to be a calculated and well-thought-out decision. And why not, you are putting your hard-earned lifelong savings into this basket after all. One wrong move can set you back by several miles in life. Lucky ones recover, the rest do not! On the contrary, the right move can earn you a lifetime of rewards – both financial and emotional.

However, there are different parameters to select the right house for you based on who you are – an investor looking to earn or a resident searching for an abode. And knowing these differences can help you make the right and the best decision. For example, great connectivity is more important for residents while investors can wait while the connectivity and rates go up.

Let’s look at these parameters one by one to understand them closely.

1. Location

• For those looking to move in :- There is no point putting lakhs of rupees in real estate that is in the middle of nowhere. Make sure the location is not too far – if not close - from the city center. It should have nearby schools, hospitals, and malls, and should be well-connected to the rest of the city via varied and affordable public transport. A good location will make it quick and easy for you to meet all your daily needs. Also, think about the neighborhood and decide if it matches your lifestyle. Even if you're considering a suburban area, consider things like future development plans, safety, and easy access to essential services.

• For those investing to earn profit :- Location can make or break your investment. Newly emerging areas, like those on the outskirts of the city or suburbs, can be a great long-to-mid-term investment for earning a handsome profit. These developing locations may not have all the facilities yet, but they have lower prices, which means there is a better chance for the property value to increase. However, be very clear about the maximum duration or time frame you’d wait before reselling. Have a long waiting period like 10 years or more on your mind? Go for any area that has just started to develop. Can’t wait that long for making a profit? Choose a location that has seen some development and price increases but hasn't reached its highest point yet. There is also a third category of investors who look for steady monthly income in the form of rent. If you are one of them, opt for areas close to job or education centers, or both.

2. The stage of construction

• For those looking to reside :- The house you are looking to purchase might be at different stages of construction. It may be ready to move in, at the pre-launch stage, or any stage in between the two. What stage of construction it is in, is very crucial in terms of loan availability and the weight of EMI and rent. For those living on rent, it makes more sense to invest in a ready-to-move-in property or one that is nearing possession. Else, you would have to handle the double burden of EMIs and rent. However, buying closer to possession means coughing up a higher cost than at pre-launch or soft-launch.

• For Investors :- If you are looking for maximum profit, enter at the pre-launch or soft-launch stage when the cost is less and exit at the time of possession when you can sell it at a premium. A real estate project is called a pre-launch or soft-launch when the project is just at the stage of ideation, planning, drawings, and strategy with either none or just a few regulatory approvals. Yes, it’s a risky investment but one with huge profit potential. The developer announces the pre-launch to generate funds from interested buyers and thus offers enticing discounts, and awesome offers to attract buyers. Sometimes the discount can be as steep as 40% making a condo worth Rupees 40 lac available in Rupees 25 lac only.

3. Quality of Infrastructure, Connectivity, and Civic Amenities around

• For Resident :- Living in an area near employment centers with schools, colleges, hotels, hospitals, and entertainment places makes life livable. But that’s not all, you also require great connectivity to move to and fro quickly, easily, and sometimes affordably. Location having good roads with bus stops, metro stations, and train stations nearby makes life easy and enjoyable.

• For Investor :- Suburban areas and places on the outskirts of the city have a lot of potentials to grow and provide profits. Just make sure they are part of the city's overall plan. Keep an eye on upcoming projects for development. Choose an area with many planned projects if you want to invest.

4. Size and configuration of the property

• For those looking to move in :-  "Buy what you want to use, sell what buyers want to own.” If you are going to use the property as a residence, opt for a configuration your family requires: be it a flat, studio apartment, independent house, or villa.

• For those investing to earn profit :-  Study what type of property is in demand in the area. It depends a lot on what is in the vicinity. Having colleges, universities, shopping and entertainment centers, and employment hub around raise the demand, rent, and price of the property you have. The thumb rule however is to opt for smaller configurations like 1, 2, or at most 3 BHK spaces to cater to the widest interest group.

                                                       Hope this article helps you make the best property investment!