Investment Tips for Buying a Home with Higher Long-Term ROI

5 years ago

Investment Tips for Buying a Home with Higher Long-Term ROI

Real estate investment essentially has two components! The first one is the living condition and the second one is the return on investment. The investors, of course, would be keen on properties that would appreciate in value at a higher rate but even the end users too are interested in properties whose value appreciates at a higher rate. Appreciation opens the possibility of selling the first property and going for a larger and a better one as the family grows with the necessity of space multiplying over the years.

The decision to purchase a home although is taken purely on the needs of the individual and the intrinsic value of it, ROI is also a factor that is considered by the prospective buyers. Knowing the ways to ascertain the value of the property in question is one of the aspects that a buyer should be good at and know.

Of late, the real estate activities in all over the country have increased by the dint of the changes in the realty sector like RERA, Benami Transaction Act, etc. and the boost of the government to surge the affordable housing. After a few such measures to organize the sector and especially the demonetization by the government, the buyers went into the wait and watch mode. But now again the buyers’ sentiments are high and developers are keen to capitalize on it through an increased spree of marketing and sales efforts.  In the highly developing cities also like Bangalore, Navi Mumbai, Pune and a few others there are places that are comparatively unexplored where the values of the properties have to be ascertained before taking the purchase decision.

Ascertaining the value of a home

Developers may offer freebies like gold, car, jewelry, etc. to allure you and pursue you to buy the home but these may not add value to the property you decide to buy. The experts opine that the buyer may be inclined to buy the cheapest home or the property available on the market but the fact is that quality determines the value. The main factors that are the determinants of the value of a property are:

  • Location of the property
  • Surroundings of the property and infrastructure
  • Brand value of the developer
  • Amenities and facilities in the project and individual homes
  • Location – The most important parameter

Location is one of the most important considerations for buying a home but as the centrally located properties may cost a ransom, the secondary business districts may be attempted to be owned. The Central Business Districts and Secondary Business Districts of a city would necessarily host the major companies and multinationals. But in cities where there has been quite a spurt of the IT and the ITeS industry, there may be IT Parks at different regions of the metropolis which are not necessarily the central locations. There may be other industrial areas in the city as well. Although from the pricing perspective the central locations may be highly lucrative and prospective, the areas that are developing because of higher employment opportunities may offer you more return on investment.

Although employment opportunity pushes the housing demand and has a great bearing on the prospect of a property, that’s not all. Let’s understand what actually has a bearing on the price. The factors that actually affect the prices of properties in any location are:

  • The demand for housing in an area and supply of houses and if the demand surpasses the supply, the prices would certainly surge higher
  • The behaviour of fiscal inflation
  • The loan interest the banks charge which is the cost of borrowing funds
  • The growth of infrastructure in the area and the transportation facilities
  • Growth of the local population in an area or migration to any place

Quality of Homes

With a lot of supply in the new corridors of cities with exponential growth, the buyers have multiple choices as the market conditions favours the end-users. Just like a car, a home is also expected to perform few critical functions like refuge, security, comfort, luxury, etc. Buyers necessarily look into these factors and the ones that give these advantages are of more demand for obvious reasons. Undoubtedly, the branded builders and developers provide these comforts and factors of living as a normal offering for the reputation they have in the market and such homes are more in demand with higher prospects.

Amenities that add value

A swimming pool, clubhouse with a children’s play area is not considered as luxury amenities but have become bare necessities in today’s urban lifestyle. The homes are no longer considered as a place for mere refuge but a place for relaxation and rejuvenation too. Projects with better amenities offering better standards of living like landscaped gardens, reflexology pathways, and others are also in more demand by the home seeking community as they essentially elevate the lifestyle. But along with this, it is certainly not true that homes and projects without such amenities do not sell but may have a lower price.

If buying a home is not alone for present comfort but for the future value too then these factors have to be kept in mind and a comfortable home with ample inner space and luxury amenities at a great location would reap more returns on investment in the long-term.