Real Estate Investment: Developing an Entry Strategy

10/02/2023

Real estate investment is a popular option for those looking to grow their wealth and secure their financial future. However, before diving into this market, it's important to develop a well-thought-out entry strategy to minimize risk and maximize returns. In this blog, we'll outline the key factors to consider when entering the real estate market as an investor.

Buying in New Launches: One popular entry strategy for real estate investment is to buy in new launches. The advantage of buying in new launches is that it often provides a payment plan spread out over a few years. Hence spreading your outflows over a period of time. However, it's important to only buy from branded developers with strong balance sheets

Payment Plan: Make sure that the payment plan is evenly spread over time and not front-ended. This will help you avoid any financial strain in the short-term. Additionally, ensure that there is no lock on reselling towards completion of the project.

Transfer Fees: Be cautious of transfer fees when buying in new launches.nsure that the transfer fees are in line with market standards.

Be careful of special payment plans such as 10:90 or 20: 80 or No Pre-EMI options, where the bulk of payments are linked to completion of the project o the Developer promises to pay the Pre-EMIs for your home loan. The prices of units can be artificially inflated to ensure the developer doesn't lose out on their investment.

Think Like an End-User: While buying as an investor, it's important to think like an end-user. Your exit strategy will likely be selling to an end-user or renting it out to an end-user, so consider the factors that will be important to them, such as ventilation, vastu, amenities, etc.

Avoid buying in grade C or D areas during new launches, as many of these projects have not been delivered on time, leaving investors stuck.

Focus on locations with strong potential for price escalation during construction

Don't trust brokers or sales staff blindly. Do your research and make informed decisions based on your own analysis.Hire unbiased property experts to support you in your research.

Taking out a home loan to reduce your equity exposure can be a smart move. You will enjoy the profits when you sell, and the only additional costs will be the interest on the loan; this will substantially increase the IRR ( Yearly return on your investment).

A well-planned entry strategy is crucial for success in the real estate market. Consider the factors outlined above and do your research to minimize risk and maximize returns on your investment.

To know more on how to go about investing Real Estate, do check out this blog of ours - https://www.propsoch.com/blogs/how-to-make-smart-investments-in-indian-residential-real-estate