In an investing portfolio, real estate is the finest alternative. Wealthy investors have been known to amass vast sums of money in the Real Estate market, and they have always encouraged others to do the same. Despite this, many inexperienced investors and first-time buyers have remained wary of real estate investments. The majority of new investors have been put off by the requirement for finance, but that is changing now.
7 must-know facts about property investment for beginners in India
1. Real estate is locally driven
Local metrics have an impact on property investment. India’s real estate market, for example, is vastly different from that of the United States. Even within India, the real estate markets in Uttar Pradesh and Haryana have distinct characteristics. Further, despite their numerous similarities, the real estate markets of Gurgaon and Sonipat in Haryana are not the same.
2. Real estate is a long-term proposition
Real estate is generally not the best place to invest if you want to generate quick money. In real estate, value appreciation takes time. If you buy a plot in a new neighbourhood, it may take several years before you can sell it for a profit. In real estate, nothing changes in months.
3. Real estate needs legal & financial understanding
While real estate development in India has mainly been unregulated, allowing investors to avoid money on taxes, various rules and regulations have been implemented in the last half-decade to restrict the misuse of real estate investment in India. Beginners who want to invest in real estate and make a fortune must have a thorough awareness of all of these laws. The RERA Act, the Benami Properties Act, and the GST Act are examples of these legislation.
4. Get assistance
While study and development are essential for a novice looking to make it big in real estate, they may not always be enough. Because of the legal and financial complications, a novice investor might benefit from some assistance. It’s just as crucial to seek advice from lawyers, chartered accountants, and property brokers as it is to learn everything there is to know about real estate investment in India. As with any subject, books can only teach you so much; a major part of your knowledge will come from the professionals you meet along the path.
5. You need more seed money in real estate than any other asset class
Low-cost products such as real estate investment trusts and infrastructure investment trusts have recently been introduced. Unlike equities and fixed deposits, however, real estate does not allow you to start with a little amount of money. To accept the risk, one must have a considerable sum of money in their bank account. Although it is difficult to give a precise figure, local conditions are the most important influencers of the initial capital. It’s reasonable to state that anything less Rs. 10 lakhs is out of the question.
6. Be mindful of tax implications
Profits from real estate investments, like any other source of income, are subject to taxation by the government. Gains from property investments may be eroded by taxes. Various laws, on the other hand, aid in the reduction of tax liabilities. Learn about the legal strategies to reduce your real estate income tax liability.
7. Know about additional monetary burdens
Stamp duty and registration fees on property purchases provide a significant source of revenue for states. These taxes raise the cost of property investment significantly. Consider these when determining the amount of money to invest.
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