Buyer Guide: What to buy? Investing vs. End-use

Buying a real estate asset, particularly a property in your name, should be a guided decision with the goals and objectives well-defined. One cannot simply leave any space for confusion when it comes to putting your lifelong savings into the realty market. Though investing and end-use are the two most frequently used words in the context of buying a property, many fail to understand the fine line of difference between the two. For instance, while location is of paramount importance while buying a home for end-use, one could probably compromise on it a little when it comes to investment. Let’s look at these important parameters closely.

 Location

End-users: For those planning to own a home for shifting into it sooner or later, location plays the most important role. Make sure that the locality is conveniently situated and one that can cater to all your needs. It should have access to facilities such as schools, hospitals and malls and should be well-connected to other parts of the city. One must consider the neighbourhood too and ascertain whether it suits your lifestyle or not. Even if you are opting for a suburban pocket, where you do not plan to shift immediately, think about factors such as political stability of the region, infrastructure plans proposed by the municipal body and the central/state governments in the area and major residential projects in the pipeline. This will help you judge the livability index of the locality.

 Investors: For those buying a property purely for an investment purpose, a thorough research of the location is of utmost importance. Realty experts suggest that newly emerging localities such as those located on the fringes of the city or suburbs may help you earn a healthy return on investment (ROI). Such developing locations might not have all social and physical facilities in place but offer lower entry price and hence, better scope of price appreciation. However, you must be sure of the time span you wish you stay in the market. For instance, if you have around 10 years, it makes sense to invest in a locality that is at a nascent stage of development. If your time span varies from three to five years, opt for a location that has witnessed some development and price appreciation but not reached its peak yet.

 On the other hand, if you intend to earn rental yield from your investment, you need to consider factors such as proximity to an economic hub and livability of the area.

 Construction Status

End-users: The stage of construction of the property you are planning to buy is very crucial as it determines your monthly outflow in the form of EMIs, if you are planning to avail a home loan. For instance, if you are living on rent, it might make more sense to invest in a ready-to-move-in property or one that is nearing possession. Else, you would have to handle the double burden of EMIs and rent. However, buying closer to possession entails a higher value than at launch and as an end-user, you must weigh the pros and cons.

Investor: If you are looking for quick returns, it makes economic sense to enter at the pre-launch or launch stage. You pay less but entail a higher risk as there is no surety of timely delivery. You may exit when the property is mid-way through construction and invest the capital thus gained in another property. However, you would reap maximum benefit if you exit at the time of possession, provided you are willing to wait that long. If you do not want to wait too long for possession, you may consider investing when the property is partially ready. In this case, the initial capital would be higher, but you may be able to lease out the property within a year or so and earn rental returns.

 Infrastructure

End-users: When buying a property for end-use, be sure that the location boasts of a well-developed infrastructure. A good road network, renowned schools, hospitals and recreational zones in the vicinity and proximity to important connectivity links such as airport, metro, railway station and bus stops ensure easy and happy living.

 Investors: At times, a lot of suburban localities and peripheral areas might not have the best of the social and physical infrastructure in place. However, one must see whether the locality is included in the main city’s master plan or not. In addition, a prospective investor must determine whether the state/central government has announced some projects that could lift the area’s location attractiveness index, thereby, infusing capital and rental growth.

 Type of property

End-users: No one but you know which property type – plot, house, villa or apartment – would address your family requirements best. So, base your buying decisions as per your family needs.

 Investors: If you wish to earn healthy returns on your invested amount, be sure to buy a property type and configuration that is in demand. To this end, you may have to interact with as many property consultants as you can and also do some exhaustive research online. A good way is to follow real estate communities and forums and decipher the demand. Interestingly, every city has a popular configuration and property type. While in metro cities 2BHK and 3BHK society apartments are the most sought after units, in smaller cities, individual houses are preferred more by the buyer base.