Buying tips

1. 1. Which option is better for investment: Real Estate or Stock Market?
It is always a matter of debate that which option is better for investment: real estate or stocks? Both have their own merits & demerits, there are several which make them unique investment option in their own way. The real estate market is similar to the stock market, with its peaks & through always seeming to make perfect sense in retrospect. Both markets reflect the economy situation of the country & offer good investment opportunities. However, the risk must be understood along with the opportunities. In Stock Market we can easily diversify the investment, but it’s hard to diversify in real estate. Diversification is possible in real estate too but it needs big investment.

Investing in stocks:
In Stocks, investment can start from small savings & also it’s easy to diversify it to reduce the risk factor. It’s easy to enter & exit in stocks. In stocks there is no time frame to invest. It can be very short term too, like: just someone invested & very short of time span he feels profit & wants to quit then he can. In other hand profit margin inherent in stock investment has always been higher when compared to other asset classes. Stock market investments offer advantages such as liquidity and flexibility, which real estate does not. Investing in stocks is very flexible, very easy to liquidate, easy to diversify, can start from very small savings & no restrictions to entry or exit, make it different from real estate.

Investing in real estate:
Earlier people were strongly emotional attached through their home. But as time passed out people find that property is not only required for their home but also it can be a best option for investment. Real estate mainly categories into two types: residential & commercial property. Unlike stocks, real estate is a non movable tangible asset, which we can see, touch & feel. It provides more psychological comfort, satisfaction & security. The return on real estate investment is reasonably consistent in comparison to stocks. Real estate is better when someone planning for long term invest & looking stable growth.

2. How can define budget for first-time buyer?
Always better to start investment in real estate in early age because every investment needs time to grow. When someone has decided to purchase their first home doesn’t forget to calculate your monthly expense. It is always suggestible that not to exceed 35-40% of you gross income as EMI. If you find difficult to buy such a home which you required due to financial issue, then don’t be panic & postpone to buy. Start with smaller one & at these location where property value is assuming to grow up. After certain time period sell this property & use this amount to buy property which fulfills your requirements. Most banks allow you to exit one loan and take another. So, you can sell off the smaller priced property in a peripheral location and use that as seed money to buy where you would like to stay. Else, you will always be behind the market in terms of finance.

3. How much a person has to invest in real estate in the age group of 25-45 years?
People who attending age group of 25-45 years can invest 300 per cent (3 times) of their total assets by borrowing for real estate investment. But insure it that total monthly installments should not exceed 35- 40 per cent of your gross monthly income. At this life stage, we are moving upwards financial situation of a person & at a younger age a person can take more risk in Comparison to older one because they have enough time to justify their decision. At this age group people have much time & enough energy to grow & also have less liability in the life.

4. How Much a person has to invest in real estate in age group of 46-65 years?
People who attending age group of 46 – 65, installment should not exceed 35- 40% of your gross monthly income. At this stage we have to select such type of property which can give us monthly return as well. So that we can plan to buy another property by using over savings & bank loan. But EMI will be managing through the monthly income of previous property investment.

5. Factors which should be in mind while calculating home loan emi?
Whenever someone planning to calculate the monthly home loan installment, consider their Monthly income along with your family member’s current income & expected future income. Secondly, your family's current expenses, including all other liabilities like loans, school fees, medical expenses etc. you are servicing, to be considered. Do not spend more than 50 per cent of the total income on a monthly EMI.

6. What key factors a buyer should keep in mind while buying a property?
Some points have to keep in mind while buying any property:

• Location: It is the most important factor to decide any property. Location is the most important factor to fix up the value of the property. Always select such kind of property which are well connected to other locations too.

• Locality – It is the key factor to decide a property for buying. Locality is the main attraction of buying a property in certain area. We have to keep in mind connectivity of the project, nearby work place, shopping area, educational institutes, hospitals, transportation, & the most important thing is future development plan for the locality & nearby area.

• Quality of construction

• Sufficient water and electric supply, other utilities

• Lock at parking space, is it sufficient or not for the locality.

• Reputation of the builder or seller

• Cost components: price, stamp duty, registration charges, transfer fees, maintenance charges, any other payments

• Appreciation of the property for resale and rental.

7. What is Super Area, Built up area & Carpet Area?
Carpet Area is the area enclosed within the walls, actual area to lay the carpet.

• Super Built up Area is the built up area plus proportionate area of common areas such as the lobby, lifts shaft, stairs, etc. The plinth area along with a share of all common areas proportionately divided among-st all unit owners’ makes up the Super Built-up area. Sometimes it may also include the common areas such, swimming pool, garden, clubhouse, etc. This term is therefore only applicable in the case of multi-dwelling units.

• Built up Area is the carpet area plus the thickness of outer walls and the balcony.

• This area does not include the thickness of the inner walls. It is the actual used area of an apartment/office unit/showroom etc.

8. Should property inspect is required before buying it?
Yes. It is very important to inspect the property before buying, by visiting the property you can be able the connectivity of the location, if property is under construction then easy to understand the quality of the construction, nearby other projects & developments, compare among other options & will be able to select best option as per your requirement. After visiting you will get a fair idea about the property, which will help you finalize the property.

9. Checklist for buying residential or commercial property.?
Identify the property you wish to purchase

• Crosscheck of current market rates of property in the vicinity and last known transactions, current market trends, compare with other available options.

• Distinguish between negotiable and fixed terms and conditions of the contract, eg. Price, payment schedule, time of completion etc.

• Finalize commercial terms of purchase of the property. Ascertain transfer fees, stamp duty and registration charges to be paid on purchase of the property.

• Avail services of property expert for property advice, valuation or property related matters, legal opinion etc.

• Check the clear titles of the property. Ask for photocopies of the all deeds of title related to the property to be purchased. Examine the deeds to establish the ownership of the property by seller, preferably through an advocate. Ascertain the survey number, village and registration district of the property as these details are required for registration of the sale. Previous encumbrances and loans, if any on the property must be cleared before completion of purchase of the property.

• Ascertain outgoings to be for the property i.e. property tax, water and electricity charges, society charges, maintenance charges.

• Request Vendor to obtain, if applicable, permission, consent, sanction, no objection certificate of various authorities such as the (a) society (b) the income tax authority (c) the competent authority under the Urban Land Ceiling and Regulation Act (d) Municipal Corporation (e) any other authority.

• If you are looking for loan for property purchase, contact financial institutions and ask for a pre approval letter, many options are available for loans.

• Permanent Account Number of Vendor and Purchaser under Income Tax laws Payment of stamp duty on the formal agreement or document for transfer of the property, signing by both the Vendor and Purchaser and registration.

• After payment of the entire sale price, take over legal possession of the property and check the receipt of original documents from the Vendor of the property.

• Make sure that property holder’s name is changed in all related records, e.g. society, Electricity Company, municipal corporation, Index II etc.

Investigate before executing sale deed:

• Title is free from defects

• Inherited property has a probated will

• There are no encumbrances on the property

• Property is not locked in litigation

• No Objection Certificate (NOCs)

• Utilities

• Property Tax