Monday, January 8, 2018

Things to Avoid while Investing in Real Estate

If you were to believe the latest national news, consumer confidence is on decline and cash deficit on builders on incline. In Mumbai, Delhi-NCR, and other popular cities, the demand has come down to around 50% for new property launches.

But not everything in real estate is gloomy, the Reserve Bank of India has recently made a cut in policy interest rates. While this news may cause a haste in investing in the sector, say in buying luxury villas in Bangalore or any other metro cities, there are some things you need to consider before making an investment. These are mentioned below for your consideration:

  • Trading in real estate properties frequently

When you trade in real estate properties more frequently – that is, buy or sell your property in shorter duration – you may incur a loss in tax benefits.

To be precise, if you sell your property within 3 years of making your real estate acquisition, such acquisition would then be called short term capital gain, which entitles you to zero tax concession or exemption.

But, if you sell your real estate property after 3 years, it entitles you to long term capital gains and the taxation for this would be at a comparatively lower rate.

Be wary that if you trade in too many times even in long term capital gains as it could alarm your Income Tax officer, who may consider this dealing as your business income and withdraw the low rate on long term gains.

  • Investing in properties that are due completion

It’s easy for your agent or builder to make excuses for not completing their project on time and completing it at a much later date than promised. They may not have any hidden agenda behind this, except prolonging time. It means a little more number of EMIs for you than which were originally expected.

The second of the two-pronged effect of the delay is this: The tax benefits that you receive on your property investment are restrained on possession, which is direct effect of long delays.

Being alert on investing in incomplete or overdue properties is therefore very important, at least for your pockets.

  • Planning your budget before investing

We know that if a budget is unplanned or unsupervised before investing in real estate, it may deplete most of your saved resources, back-up money, or hamper your short-term investments. It may also affect your daily expenditure and can create dearth in your cherished small purchases every now and then.

Purchasing properties not just involves a down payment but also what seems as an endless array of EMIs – directly affecting your monthly salary.

Seek the professional advice of your financial consultant before buying a real estate property. A good recommendation would be saving at least 40% of your total income after you have made your investment.

  • Considering all the factors before making your investment

As again like planning your budget, it is equally important in knowing and fully understanding all factors involved with making your investment, because knowing the loan criteria, real estate details, and repaying capacity are not adequate. Consult a financial adviser for a complete financial plan on your investment.

  • Plenty of investment in properties may not result in profits always

The best idea would be to divide your finances into different types of investments, and not just stick to investing in real estate. First because transaction costs in real estate are much higher than say investing in gold, bank deposits, bond funds, equities, etc.

The prime reason that people choose to invest in lump sum in properties is because their prices increase at a faster rate compared to other most forms of investments. While this may not be true always, it’s wise to be aware of the current changes or trends in the market for accurate predictions.

If you are planning to make any investment such as buying villas in Bangalore or Chennai, etc., these above-mentioned points should hopefully help you in making the right investment.

This is a guest post by Dinesh Dhawde


  1. This comment has been removed by the author.

  2. Yeah it's a great & knowledgable blog which is shared over here. There are many real estate companies in jaipur, Rajasthan. Suvaas is one of the best among them. For more details you can visit here at Affordable Flats in Jaipur

  3. Amazing blog. As we know demand for real estate is growing in an alarming rate, it’s very important that people should aware about the major drawbacks of investing in real estate. Anyone looking for Villas in Whitefield, before buying just go through above blog and avoid things that are mentioned in it.

  4. Thanks for sharing awesome information about real estate projects.Shapoorji Pallonji Joyville Whitefield

  5. Great & knowledgable content has shared by you. That's awesome! Suvaas is a leading real estate company in Jaipur, rajasthan. You can know more about it here at 2 BHK & 3 BHK Flats in Mansarovar

  6. Detailed article. I liked it. I recently purchased one of the new flats for sale in Chrompet as it is in a developing location and looking at serious infrastructural development in the future.

  7. Great & Knowledgable article has shared by you. A real estate enthusiast should go through with this blog. Shree Ram Group is a leading real estate company in Jaipur, Rajasthan. You can know more about it here at Affordable 1 BHK & 2 BHK Homes in Jaipur

  8. Hey, nice article mate..!!

    But I do have a suggestion. Plenty of apartments in Chennai do result in property. That is these apartments are good source of income for the people of Chennai in the form of rentals. People get a great deal of returns in this idea and would love to invest in real estate of Chennai.

  9. Good info Dude

    Am thinking of investing in real estate lately and especially on luxury villas in Chennai. This provided good insight on making my first investment.

  10. Great info
    I was so confused about investing on villas in Kelambakkam, this article helped me get an idea though. Thank you.

  11. Great information. Anyone looking for apartments for sale in HSR layout, before buying just go through above blog and avoid things that are mentioned in it.

  12. Thanks for sharing awesome information about real estate projects.... Thanks for sharing that..
    Real Estate Developers in Lucknow, Plots in Lucknow

  13. Thank you dinesh for this blog am also looking property in pune, & i find highmont hinjewadi project is the best for invest my money

  14. Very impressive blog. Thanks for this wonderful post. Find properties for sale hyderabad

  15. Nice!
    This is a informative blog which i want from so many days. I like your blog and the way of representation of content.

    California real estate investment clubs


  16. Thanks for the information... I really love your blog posts... Increase your Sales through Top seo companies in Chennai

  17. great post! thank for sharing it with us.
    Technology has changed the way we do things. The way we shop, the way we socialize, the way we purchase groceries, travel and most importantly, the way we buy a home. Today 65% of the people prefer using technology to look for a home on a internet, whereas only an 11% prefer using traditional methods like newspapers, television ads, and banner ads. Sure, they each have their benefits, but the question comes down to which is more efficient and reliable. Technology has changed the real estate game

  18. Thanks for a nice share you have given to us with such an large collection of information. Great work you have done by sharing them to all. simply superb.
    2 bhk flats in Chennai

  19. It's Great Article Cache Chief has recently collaborated with Shree Radha Aangan, a township project that spreads across 55 acres of land. Shree Radha Aangan is a residential project started with a vision of providing housing away from the hectic lifestyle

  20. Interested information sharing through your blog. Keep updating.
    Reputed Builders in Chennai

  21. Shreyas Enterprises home loans in Vizag

    Shreyas Enterprises Vizag is engaged in offering Home Loans to the clients In Visakhapatnam. A crew of experienced personnels
    works with enthusiasm for rendering best services