Welcome to My New Real Estate Blog

Rishi Maheshwari

How to invest in real estate market

A Beginner’s Guide to Investing in Real Estate
A smart investment has the potential to change our lives, providing us sufficient funds to live our dreams. Today, most of us have an investment portfolio comprising of a number of investments, be it stocks, gold, bonds, government schemes, etc., but one of the most underrated or ignored investment in recent times remains to be real estate. Given the huge economic boom in most Indian cities, the average income has increased, providing us added incentives to invest for the future and real estate could be the ideal investment choice for you. Real Estate and Its Importance
Kingdoms have fought battles over land for centuries, leaving no stone unturned in order to win that priceless property. While kingdoms might not exist today, the truth remains that the demand for land hasn’t changed, with everyone vying for a share of what’s available. Given the fact that prime real estate never loses demand or value, investing in it can be a great move, offering returns far higher than traditional investment options. Owning a home is the dream of everyone, and fulfilling this dream can not only give you emotional satisfaction but also monetary joy. Given the shortage of land in cities across the country, purchasing even a small flat can offer you returns, either in the form of rental income or by selling it for a profit. Points to Consider Before Investing in Real Estate
It is possible for someone who has no prior real estate experience to get carried away by the lure of profits and invest in real estate which offers no returns. Real estate investment comes with certain risks and a beginner should keep the following points in mind before spending his/her hard earned money.
• Stay Patient – Buying a property is a time consuming affair, with most genuine property transactions taking a few days to be complete. While a number of real estate firms offer to complete formalities overnight, the fact remains that exhibiting patience can help you land a good deal. Jumping the gun can see you pay more for the property, or purchase one which doesn’t live up to your expectations. Also, sellers can delay projects, which could see your investment not offering any returns for a certain period, checking your patience.
• Research The Property – Doing your homework before you step out to look for a property is critical today. With a number of projects coming up, it can be confusing to choose the right real estate, for sellers are typically known for sweet talking buyers. The amenities on offer, the history of the construction company, the materials used, the area a property is located in
can all play a role in determining the returns you get on your investment. Failing to research before buying could see you regret later, negating your investment.
• Check The Papers – The papers of a property are perhaps the most important factor one should consider, for it is possible for someone who is not acquainted with the real estate industry to get scammed into buying a property with fake papers. Buying a property without clear titles can lead to long drawn court cases or litigations, which essentially nullify the investment. All property papers should be checked by legal experts to authenticate them, for failure to do this could see you purchasing a property which could be mired in controversy. A number of times people sell properties below market rate, which should alert you, for such properties could have litigations or internal issues with the owner.
• Check Market Rates – Most local governments provide a guidance value to help investors know the rate of a property. Knowing the market rate can help you track local trends, ensuring that you don’t get scammed into paying a higher amount than what a property deserves. Researching market rates and working out developments could help you extrapolate the returns you could expect in the future.
• Talk To Neighbors – Talking to the neighbors is a good idea which most of us tend to ignore. This can help you get a first-hand perspective of how things are in a locality, helping you narrow down any problems or areas which could dilute an investment. Talking to them can also help you know the current market rates and see how the area has developed and the scope for future development. Given the fact that neighbors aren’t salesmen trying to sell you the property, one can get a clear picture of the real estate they intend to buy.
• Calculate Your Finances – It is important to calculate the finances you have in order to ensure that you meet certain goals. While it is easy to get loans from banks, calculating the interest and other factors is crucial.
• Remain Positive – It is important to stay positive while executing a real estate deal, for there are bound to be times when deals don’t fall into place. Remaining calm and composed while interacting with property sellers can help you get additional benefits.
• Negotiate – Negotiations are a key aspect of the Indian real estate system, as everyone is looking for a deal which will make them richer. Knowing the art of negotiation can help you save a lot of money and get additional freebies like parking spaces, furniture, etc.
• Consider The Risk Factor – Real estate investments are typically safer than other investments, but that doesn’t mean they are totally risk free. Legal hurdles and property disputes are extremely common in India and one should ensure that the property they are interested in is clear and minus the hassles.
Owning a property can be the smartest move given the changing dynamics of our times, and keeping these simple points in mind can point a beginner towards the right path to investing in real estate.
How to Invest in Real Estate: Ways to Get Started
Real estate investments can add diversification to your portfolio — and getting into the market can be as easy as buying a mutual fund.
If you’ve ever had a landlord, you probably don’t dream of being one: Fielding calls about oversize bugs and overflowing toilets doesn’t seem like the most glamorous job.
But done right, real estate investment can be lucrative, if not flashy. It can help Diversify your existing investment portfolio and be an additional income stream. And it doesn’t always require showing up at a tenant’s every beck and call.
The trouble is that many new investors don’t know where or how to invest in real estate. So here are five options, ranging from low maintenance to high.

1. Invest in Real Estate Investment Trusts (REITs)
   A REIT, or Real Estate Investment Trusts, is a company that either owns or finances real estate that produces income. REITs invest the majority of their money into real estate, and it’s how they make the majority of their income.
   REITs allow you to invest in real estate without the physical real estate. Often compared to mutual funds, they’re companies that own commercial real estate such as office buildings, retail spaces, apartments and hotels. REITs tend to pay high dividends, which makes them a good investment in retirement. Investors who don’t need or want the regular income can automatically reinvest those dividends to grow their investment further.
   New investors may want to stick to publicly traded REITs, which you can purchase through an online broker.
   REITs can be varied and complex. Some trade on an exchange like a stock; others aren’t publicly traded. The type of REIT you purchase can be a big factor in the amount of risk you’re taking on, as non-traded REITs aren’t easily sold and might be hard to value. New investors should generally stick to publicly traded REITs, which you can purchase through brokerage firms.
2. Invest in Real Estate Mutual Funds
   Real estate mutual funds differ somewhat from REITs. Whereas a REIT is an actual company, mutual funds are simply investments pooled together and overseen by an investment manager.
   A mutual fund allows investors to have diversified their portfolio both in terms of having a mutual fund and having real estate. Like with other sorts of mutual funds, you can choose ones that are growth-oriented or income-oriented. As a diversified asset, they are designed with the intention of mitigating risk, but they are still vulnerable to the risks inherent in real estate. If a real estate-related risk negatively affects one of the investments in the fund, it’s likely to impact a lot of others too.
3. Invest in rental properties
   This can mean a few different things. In theory, if you have the money you could purchase an entire rental property and rent out any room or apartment to tenants. Keep your expenses low so you can keep rent affordable to entice prospective tenants.
   You also could purchase property that you live in, while renting out other rooms in the property. Either way, you’re the landlord. Be a good one, and you’ll be in a much better position to succeed on this investment. Keep the property in great condition, be readily available to your tenants when needed, and if necessary hire someone who can help with repairs.
   For e.g. Paying guest, Hostels.
   House hacking allows you to live in your investment property while renting out rooms or units.
   Enter the market using a strategy sometimes called house hacking, a term coined by BiggerPockets, an online resource for real estate investors. It essentially means you’re occupying your investment property, either by renting out rooms, or by renting out units in a multi-unit building. David Meyer, vice president of growth and marketing at the BiggerPockets U.S, says house hacking lets investors buy a property with up to four units and still qualify for a residential loan.
   Of course, you can also buy and rent out an entire investment property. Find one with combined expenses lower than the amount you can charge in rent. And if you don’t want to be the person who shows up with a tool belt to fix a leak — or even the person who calls that person — you’ll also need to pay a property manager.
   “If you manage it yourself, you’ll learn a lot about the industry, and if you buy future properties you’ll go into it with more experience,” says Meyer.
4. Rent out a room, Use Lodging Apps like Airbnb
   Finally, to dip the very edge of your toe in the real estate waters, you could rent part of your home via a site like Airbnb. Its house hacking for the commitment-phoebe: You don’t have to take on a long-term tenant, potential renters are at least somewhat prescreened by Airbnb, and the company’s host guarantee provides protection against damages.
   Airbnb has become a popular way for some property owners to supplement their income. Why not incorporate it into your own investment?
   How Airbnb works: Register your house on the app, specify the type of lodging you’re offering (you can offer a room or the entire property), how many people it can accommodate and its availability. You also get to approve the guests staying at your property.
   Airbnb can be a good choice in certain areas. Desirable vacation destination? Close to a music festival? Nice apartment in a popular city? You may be able to make a decent profit using Airbnb. If it’s a property you own but don’t reside in, the added availability can help out a lot.
5. Wholesaling Houses
   Wholesaling real estate is a little similar to flipping homes, but you don’t own the home and you don’t have to front any maintenance cost.
   Wholesaling a house means contracting someone who is looking to sell their house, and quickly taking that contract and selling it to a prospective buyer for a profit, which the wholesaler keeps. No fixing up involved.
   If you can actually successfully do this, great! There’s much less risk as you’re not putting your own money into the operation. The difficult part of doing this is actually finding a house that has been undervalued on the market that you can manage to sell for a profit.
6. Fix up and resell properties
   You purchase an underpriced home in need of a little love, renovate it as inexpensively as possible and then resell it for a profit. Called house flipping, the strategy is a wee bit harder than it looks on TV.
   “There is a bigger element of risk, because so much of the math behind flipping requires a very accurate estimate of how much repairs are going to cost, which is not an easy thing to do,” says Meyer.
   His suggestion: Find an experienced partner. “Maybe you have capital or time to contribute, but you find a contractor who is good at estimating expenses or managing the project,” he says.
   The other risk of flipping is that the longer you hold the property, the less money you make because you’re paying a mortgage without bringing in any income. You can lower that risk by living in the house as you fix it up. This works as long as most of the updates are cosmetic and you don’t mind a little dust.
7. Purchase Vacation Property
   Vacation property means renting out to tenants for shorter periods. Maintain a good house in the right area, and you may be able to make the same money off a few vacation tenants that you might make from a year-round tenant elsewhere.
   Vacation rentals, because they are so often in a desirable area, can be expensive both to buy and maintain. Who wants to rent out a pigsty for their vacation? Weigh the pros and cons carefully. If you do it right – research carefully and consult with good Realtors – a beach rental can be lucrative come summer.
8. Purchase Commercial, Non-Residential Property
   Commercial property – retail buildings or office buildings – is an intriguing option for those who want to invest in real estate beyond just residential property. It’s costlier, and you may want to look for partners in this investment.
   As owner or part-owner of the property you can rent it out to businesses in need of space. It is high-risk, high-reward real-estate investing. Income made from renting space to businesses is generally higher than that from residents, and often the contracts to lease commercial buildings are longer than residential ones.
9. Real Estate Partnerships
   Some real estate investments require an exorbitant amount of money. Not everyone can foot that. If you’re not the only one involved in the investment, however, it could become more manageable.
   Partnerships are a common way to invest in real estate, with each person taking over different responsibilities. Often, this can be used as a way to purchase property at a lower price. You can set the terms – such as simply paying the mortgage, or perhaps handling the down payment for the property. Depending on the terms of your partnership, you may be investing in real estate without doing too much hands-on work of owning property.
10. Buy Your House… That’s It
    Yes, if you bought a house and now live in it, congrats. You’re a real-estate investor!
    Rather than buying a house specifically to flip it, buying and holding can sometimes be incidental to why you actually bought the house: to live there. But consistently paying your mortgage and doing general upkeep for the house to make improvements can up the value of your home should you one day look for a new place to live. Treat your house like a long-term investment, and it could pay off down the line.
    If buying property is too expensive of an investment for you, it’s not only way you can add real estate to your investment portfolio. There are plenty of ways to have a stake in the real-estate game.
11. Become a Real Estate Appraiser
    Have you considered employment within the real estate industry? It can not only be an investment of sorts, but prepare you for how the market is doing and when the time is right to make good investments.
    One job within the industry to consider is a real estate appraiser. An appraiser can specialize in either residential or commercial real estate, and determine the value of a property. They take specifics about both the property and its nearby surroundings into account to do this.
12. Start a Brokerage or Become a Real Estate Agent
    You could also get into the game of selling real estate. Real Estate Agent require some education and training before they can actually get out there and flip houses, but successful real estate agents can take home nice commissions on the properties they sell.
    Agents generally work for real estate brokers, and if you’d rather be at the top than out there selling the homes, perhaps consider opening a brokerage and hiring agents. Brokerages get a large part of the commission that the agents make, so having successful agents can bring in a lot of money.
    But starting a brokerage isn’t simple, and it’s incredibly expensive. You need extensive training and licenses to open and maintain one. If you’re a successful agent looking for the next step in their real estate career, it could be a great idea. But if you don’t have that level of success, knowledge or funding, you may want to start with becoming an agent.
    How Much Money Do You Need to Invest in Real Estate?
    Depends on what form of investment you plan on doing. You probably don’t need me to tell you that if you’re buying a house that you’ll need a lot of money for it.
    The more disposable income you have for your investment, the more options you have. Buying property is exceptionally costly, as is the work you’ll be doing to the property if your plan is to sell it as a fixer-upper or rent it out. Even if you just plan on living in it and paying your mortgage, that’s a long-term plan for paying off the investment. At minimum for any of these you’d need tens of thousands of rupees, and that can spiral into hundreds of thousands quickly. Who has that sort of cash just hanging around?
    Is Real Estate a Good Investment?
    If you’ve done the proper research on the market and the specific ways you want to invest, real estate has the potential to be a solid investment.
    Ultimately, the biggest way to determine whether it’s a good investment is how it fits into your current financial state. Like any investment, real estate won’t work out well if you make an investment you can’t afford. If you can’t afford property to invest in without having to borrow money, then it won’t be a good investment. Do the research and know the limits of what your financial situation can handle.