Home purchases are driven by both finances and emotions. The first drivers that make the decision are more emotion based like comfort, social standing and environment for children. While these are factors for anyone who is choosing a home for their family, one must remember that the prime factor to consider is the financial one. When you buy a house, its a financial investment. You create wealth that appreciates over time and also has the possibility of becoming one that gives additional income. On the surface all these assumptions are correct but one must look deeper in order to understand the investment better.
Real estate is very inconsistent and properties may not appreciate as expected. The predictability of real estate is similar to the equity markets where anything can happen. Hence a better understanding of location, social infrastructure, future possibilities and builder reputation need to be considered. Clear legal documentation is also important an done must ensure that clear and undisputed deeds are given at the time of purchase.Properties which have all these factors going for them have a better chance of appreciation in the future.
The current property price can drive demand in a particular area but as a home buyer one has to take into consideration their own availability of disposable income for purchase of the property. There are tax benefits for every investment into property and understanding this can prove useful while deciding on your loan and EMI amount.
Purpose of purchase
Real estate prices constantly move up and down due to the changing economic conditions. But, there is this certainty that people and businesses will always need a roof over their heads. And, this means that one can always boost his total earnings from a property by hiring it out. Rents may not be as high for a residential property, as the prices of assets have risen considerably.
Choosing the right apartment
Apartments offer an affordable entry point into the property market, but there are many critical factors to consider before you take the plunge. Avoid buying in the far outskirts just because it comes cheaper, because appreciation of such property is slow and very uncertain. Large developments with hundreds of apartments do not have a unique factor and hence cannot command a premium either on resale or rental.High rises have huge maintenance costs.Boutique apartments are more preferred because of the flexibility they offer in terms of resale and ease of finding renters.
So before you put your money into an apartment next time, assess the situation in totality before taking the plunge.