Check builder credentials before investing in properties
Do thorough and detailed analysis before taking a final decision on buying a property
Real estate,as a mode of investment,is growing rapidly. Therefore,it is important to take a right decision before investing.
Real estate dealers are extremely smart businessmen and have perfected the art of drawing out money from prospective buyers through various attractive schemes. For example,when you reach a developer’s office,you are told that all flats are sold and only the ones on the 18th floor and the 22nd floor are available. Even for that there are several inquiries and you need to take a quick decision. You are also told that the prices of the properties would be increasing in the next two days.
The pressure of taking a quick decision sometimes makes one purchase a property before even scrutinising the details of the developer – a step that can result in losing money.
If you have entered the real estate market with an aim to buy/sell properties in a short span of time,you will need to cultivate few lists that can help you pick up the right properties at the right price and time.
Choosing the best investment property is a process that involves knowing what you want out of the purchase and finding the real estate that will allow you to reach those goals in the most efficient manner. Since investment properties come in several different types and are found in a variety of settings,knowing what you want is key to the process.
A thorough and detailed analysis of various builders and housing schemes should be done before taking a final decision. Some unscrupulous real estate builders may have bought the part land and tried to pass it off to make quick money. As an investor,you have to ensure that you do a complete check on the builder’s credibility. Although the Indian real estate industry has several big as well as small players,it is important to remember that there is no regulatory authority to check their functioning. In such a scenario,investors have to be very careful while taking their real estate investment decisions.
CHOOSING A BUILDER
The selection of a real estate builder and investment in a housing scheme should be done after considering the following:
Check the background and the reputation of the real estate builder through referrals,those who have worked with them in business or by checking the progress of previous projects announced by the company concerned.
Check the track record and efficiency of the builder in completing previous projects. A builder’s efficiency can be judged on the basis of the timelines or delay in its completion,quality of construction,compliance with the terms of agreements with the investors and the type of amenities provided in the existing projects.
Always survey a sample flat and check the material used. Also,check the dimensions of rooms and the design.
Compare the prices quoted by the various builders and the facilities offered by them.
Check the funding of the project and whether it has a good rating by any certified agency.
If the builder is selling completed flats,check whether he has the requisite completion certificate and occupancy certificate from the municipal authorities.
BEFORE SIGNING A LEGAL DOCUMENT
After the selection of a builder and the housing scheme,certain things need to be checked for before signing a formal agreement.
Confirm the total cost of the project and its components. Check whether all the costs pertaining to furnishings and fittings are included in the project cost.
Get the agreement checked or verified by a real estate lawyer just to ensure there are no legal hassles in future.
Check copies of government clearances received for the project and alterations,if any,made subsequently.
Ensure that the agreement clearly mentions the carpet area as also the size of the balcony or balconies.
Check for the date of possession and mention of any possible delays.
Check for the completion certificate and if it is not included,ask when the builder will be ready to give it. A completion certificate is essential for the registration of a house and completion of several other governmental formalities.
Remember that the best investment property is the one that allows you to reach your goals and provide the greatest degree of financial security possible. This is true whether you plan to hold onto the property over the long term,or plan to sell the property after making a few enhancements. Make sure the sale price is reasonable,the property is in a good location,and that you can manage the taxes and other expenses related to the property as you prepare it to make money. Keeping these three factors in mind will greatly enhance your chances of choosing the best investment property and making the type of profits you want.
Author is Managing Director,Bajaj Capital
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