I would like to share my knowledge and experience of real estate investment and also invite your comments, judgments, and experiences of the same.
1. Real estate prices are cyclical in nature, demand and supply based so park your money in reoccurring deposits and wait for right time to enter.
2. Land and Built up (constructed) properties have different dynamics.
3. House is a need and investment both. When you are young you can rent a house and invest your money in Land, Bonds or Fixed deposits for higher returns. When you are ageing owning a house becomes a must; to avoid shifting, emotional value and feeling of security.
4. When renting a house lookout for longer time frames, leave license can be done in multiples of 11 months, you pay less commissions and fees.
5. When buying a house calculate your requirement for future (family size) and a thought on city you would like to retire. Older citizens require more security and protection hence a gated community is a must.
6. When buying a house (or building one) following is the checklist:
5. When buying a house calculate your requirement for future (family size) and a thought on city you would like to retire. Older citizens require more security and protection hence a gated community is a must.
6. When buying a house (or building one) following is the checklist:
a) Infrastructure of Location; Roads, Water, Electricity, Schools, Market, Drainage, domestic help etc…
b) Reputation of Builder; history, plan approvals, amenities, specifications, visit to past projects…
c) Verification of documents by your lawyer and pre approval of banks for loans.
d) Compensation clauses for delay in possession.
e) Carpet area and loading for built up.
7. Buy a house in a project being just launched where rates are mostly lower, in projects where most of the houses are sold builders hike the price on last few. Resale houses in same locality which are little older are available at much lesser rates. Buying property nearing redevelopment can reap rich bonanzas.
8. Returns are higher in Land than constructed property, higher in commercial than residential premises.
9.Investment in land calls for knowledge of Property card, 7/12 extracts, Mutation, History, Measurement survey, Demarcation, Zone, Subdivision, Sanctioned layouts, Regional Development plan, NA approvals, Set off and NOC from: highways, railways, high tension wires, monuments, rivers and valleys, Society byelaws, Municipal byelaws.(use google search for it).
10. Buy Land in Locations where infrastructure development is expected like bridges, roads, upcoming IT parks, Industrial developments etc…
11. Always Sell Land where appreciation has maxed out. Cities grow like ripples, keep buying on outer periphery. Hold on to good property like family silver.
12. Buy Shops, Offices and Flats and rent them out .They give you a productive return and appreciation as well. Returns are lowest in Flats. Buying in booking phase gives you deferred payment and lower rates.
13. Form groups and co-operatives to collectively invest. Collective purchase power enables you get properties at lower rates.
14. As a general rule SELL after 12 months into a boom period and BUY after 18 months into recession.
15. When in doubt always ask because it’s your hard money at stake.
9.Investment in land calls for knowledge of Property card, 7/12 extracts, Mutation, History, Measurement survey, Demarcation, Zone, Subdivision, Sanctioned layouts, Regional Development plan, NA approvals, Set off and NOC from: highways, railways, high tension wires, monuments, rivers and valleys, Society byelaws, Municipal byelaws.(use google search for it).
10. Buy Land in Locations where infrastructure development is expected like bridges, roads, upcoming IT parks, Industrial developments etc…
11. Always Sell Land where appreciation has maxed out. Cities grow like ripples, keep buying on outer periphery. Hold on to good property like family silver.
12. Buy Shops, Offices and Flats and rent them out .They give you a productive return and appreciation as well. Returns are lowest in Flats. Buying in booking phase gives you deferred payment and lower rates.
13. Form groups and co-operatives to collectively invest. Collective purchase power enables you get properties at lower rates.
14. As a general rule SELL after 12 months into a boom period and BUY after 18 months into recession.
15. When in doubt always ask because it’s your hard money at stake.
real estate cycles typically have an average duration of six to nine years and they cycle through phases including: Recession, Recovery, Expansion and Contraction.
Recession
The Recession Phase follows a market opposition, when the availability of financing is tightened and property values fall greatly. Properties experience vacancies and owners cannot sell because financing has become unavailable to potential buyers. Prices fall far below the cost to construct the same building like new, resulting in many excellent buying posibilities for those with the cash on hand to take advantage of market weakness. Foreclosures increase and property owners become even more motivated to sell as investors sit on the sidelines. As the Recession phase lasts longer, the lower home prices usually go. This is the time to buy.
Recovery
In the Recovery Phase, all the leftovers have been cleared out and prices begin to recover, although most investors are still tentative to buy just yet. New tenants enter the market and property owners refinance as more affordable financing becomes available. Prices begin to move up. This is the time for owners to improve their property, maximize rental rates and wait for the next phase.
Expansion
At this point the real estate market is vastly improving and investors are currently investing in properties with a substantial return. Institutional financing is readily available and the price of updated real estate moves up well over the cost to construct the same property new. Vacancies are at their lowest, prices are at their peak and there is a general feeling of wellbeing, prosperity and abundance. This is the time to sell.
Contraction
It is in the Contraction Phase that reality sets in. The market has become overbuilt and vacancies begin to rise. Financing and equity investment decline from the market as foreclosure rates rise. Prices begin to fall from the peaks of the expansion phase. Investors rush to exit the market, causing prices to fall with rapid speed.
These phases always happen in the same order it just depends on the length of time each cycle has.
When to buy and when to sell
The biggest issue is what phase are we in? It's easy to see what phase you are in while you are in the middle of it, its the beginning and ending that are fuzzy.
To make money, "Buy Low and Sell High" universally applies. The best time to buy is when the cycle is in the Recession Phase, when the best deals become available. In this phase the best prices and terms can be negotiated, well below the replacement cost to build the property new. The time to sell is during the peak of the Expansion Phase, when buyers can easily obtain financing and the market is on a high note. Another old saw applies here: "Buy when everyone is selling and sell when everyone is buying." This is the easiest determining factor.
The best thing about all this, is it is cycles. Things will always get better and things can always get worse. Finding the right time to invest is all about timing
Recession
The Recession Phase follows a market opposition, when the availability of financing is tightened and property values fall greatly. Properties experience vacancies and owners cannot sell because financing has become unavailable to potential buyers. Prices fall far below the cost to construct the same building like new, resulting in many excellent buying posibilities for those with the cash on hand to take advantage of market weakness. Foreclosures increase and property owners become even more motivated to sell as investors sit on the sidelines. As the Recession phase lasts longer, the lower home prices usually go. This is the time to buy.
Recovery
In the Recovery Phase, all the leftovers have been cleared out and prices begin to recover, although most investors are still tentative to buy just yet. New tenants enter the market and property owners refinance as more affordable financing becomes available. Prices begin to move up. This is the time for owners to improve their property, maximize rental rates and wait for the next phase.
Expansion
At this point the real estate market is vastly improving and investors are currently investing in properties with a substantial return. Institutional financing is readily available and the price of updated real estate moves up well over the cost to construct the same property new. Vacancies are at their lowest, prices are at their peak and there is a general feeling of wellbeing, prosperity and abundance. This is the time to sell.
Contraction
It is in the Contraction Phase that reality sets in. The market has become overbuilt and vacancies begin to rise. Financing and equity investment decline from the market as foreclosure rates rise. Prices begin to fall from the peaks of the expansion phase. Investors rush to exit the market, causing prices to fall with rapid speed.
These phases always happen in the same order it just depends on the length of time each cycle has.
When to buy and when to sell
The biggest issue is what phase are we in? It's easy to see what phase you are in while you are in the middle of it, its the beginning and ending that are fuzzy.
To make money, "Buy Low and Sell High" universally applies. The best time to buy is when the cycle is in the Recession Phase, when the best deals become available. In this phase the best prices and terms can be negotiated, well below the replacement cost to build the property new. The time to sell is during the peak of the Expansion Phase, when buyers can easily obtain financing and the market is on a high note. Another old saw applies here: "Buy when everyone is selling and sell when everyone is buying." This is the easiest determining factor.
The best thing about all this, is it is cycles. Things will always get better and things can always get worse. Finding the right time to invest is all about timing
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