How to do Real Estate Investment in India

How to do Real Estate Investment in India ?

Last decade average return from owning real estate in the top 10 cities in India has plummeted a lot to 11.6% per year. The data is from the House Price Index which is tracked by The Reserve Bank Of India in 10 cities. But you still can make a lot of money in Real Estate Investment.

Don’t wait to buy real estate, buy real estate and wait

T.Harv Eker

So how can I get rich from real estate Investment?

Billionaire investor Andrew Carnegie appropriately said, 90% of millionaires made their abundance of money by putting resources into real estate. 

What’s more, with time I have understood that it is valid, just on the off chance that you build up the impetus brain to make the most awesome aspect of the chance. 

The area of real estate requires an eye for detail.

There are a lot of ways to make money in Real Estate 

  • Real Estate Agent: In India to be a real estate agent you will be required to have a registration with RERA, under The Real Estate Regulation Act, 2016 (“RERA”). 

After that, you can be a buyer’s agent, list homes for sellers, make money by selling short sales, become a property manager, be a commercial real estate agent.

  • Real Estate Broker: As a broker, you will be responsible for the realtors in your office. You will likewise be running the workplace. Your duty will be to guarantee that everybody works legitimately and you will deal with any lawful debates. 

You can begin with several specialists in your office and afterwards grow up from that point to have more specialists working under you.

  • Flipping Real Estate investment : Flipping a property is a potential way to clock amazing returns on investment. 

What do flipping even means, let’s understand this with an example, suppose you found a home priced at Rs 50 lakh and the owner has plans to move to another city and he is down to get a lower price in order to get a quick deal. 

Now you will do some due diligence with the help of an expert and if you find the price is worth the property, you will make an offer of Rs 45 lakh chances are you will get the deal at around Rs 47-48 lakh. 

After getting the property make minor changes and make the property more presentable and ready to move in. 

Now you can list the property at around Rs 55 lakh and if even after 6 months the property gets you a deal of Rs 53 lakh, you have got a very good return on your investment. 

  • Investing in Real Estate for passive income: Buying real estate for rental income is one of the traditional ways of making passive money. So how to do it, let me explain it by example:

When you buy real estate you have 

  1. Gross income
  2. Expenses
  3. Net Income

So let’s suppose you buy a property worth Rs 50,00,000 lakh and its monthly rent is around Rs 1,00,000 lakh, now your gross income is Rs 1,00,000 per month.

But, I remind you that you have Expenses like 

  1. Property tax: Rs 6,000 per month
  2. Insurance: Rs 4,000 per month
  3. Gardener, Pest control: Rs 1,500
  4. Repairs: Rs 2,000
  5. Management: Rs 1,000 ( if you hire a property manager )
  6. Vacancy: Rs 5,000 ( if your property gets vacant )

Total: 19,500/- per month

Now let us calculate your Net Income = Gross Income – Expenses 

Rs 1,00,000 – Rs 19,500 =  Rs 80,500/-

Value and ROI of your property will be calculated as 

Rs 50,00,000 = Rs 9,66,000 = 19.32% Return

I know this value is of return is unrealistic but as an example, I hope you 

understand the idea behind how to evaluate your property before investing in it.

  • REITs: If you don’t want to get in direct contact with Real estate you can invest in REIT (Real Estate Investment Trust).

These are companies that own or invest in income-producing real estate.  These companies need to meet a number of requirements to qualify as REITs. 

You can buy shares in these REITs on any of the major stock exchanges and can enjoy the sweet dividend paid by them and the appreciation in their stock price.

This is a comparatively safe way to invest in Real Estate as your money is well diversified and you can start investing without having a good amount of capital. 

  • Construction: In India construction business is one of the most profitable businesses, but a lot more risk is involved in the sector.

Before you start construction you will need to keep some factors in mind like

  1. Neighbourhood: The neighbourhood where you purchase will decide the kinds of buyer you draw in and your opportunity rate. In the event that you construct near an IT park, odds are that IT experts will overwhelm your pool of expected buyers and you could without much of a stretch fill the opening. 
  1. Future development: You can research in detail about the area and its future development and if there are plans for expansion and a lot of development around the area your construction will be able to pay you back handsomely.

The most important thing that you have to keep in mind is real estate totally depends on Location and future developments.

Conclusion: 

Regardless of whether real estate investors utilize their properties to produce rental pay, or to wait for their chance until the ideal selling opportunity emerges, it’s feasible to work out a powerful investment program by paying a moderately little piece of a property’s absolute worth forthright. Furthermore, similarly as with any investment, there is benefit and potential inside real estate, regardless of whether the general market is up or down.

So, what are your thoughts on real estate investment? Comment down your thoughts.

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Written by
Sourav Suman
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Sourav Suman

Blogger, currently pursuing B.A LL.B, Investor, and Personal Finance Enthusiast...

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