Evolve an exit strategy in buying your real estate investment.....

Evolve an exit strategy in buying your real estate investment

Based on the estimated population growth, an all India housing demand of over 12 million houses over the next five years will put immense pressure on the developer community to achieve such figures. This becomes difficult to achieve due to laxity in regulatory and economic scenario.

The major contributors to the above demand of 12 million units are the middle income groups (MIG) and the high income groups (HIG) in the metros and the mini metros of the country. With a marginal gap in requirement between the HIG and MIG the Lower Income Group (LIG) has the minimal demand of the required number.

The above figures look encouraging for those who plan to make multi-fold returns from real estate investments. The realty brokers in every corner too, will push you to buy the BEST available project in the area. However, as an INVESTOR in real estate you need to answer some questions to yourself.

• What should you buy: plot, residential apartment or commercial?
• Why should you buy the chosen category?
• What is my exit strategy from the investment?

Before considering any of the properties you should be able to answer the above questions. Let’s look at various aspects of choosing a specific category for real estate investment.

Plots

Mark Twain once said “Buy land they aren’t making it anymore”. With land banks decreasing day by day, land is an evergreen investment and has the potential to give phenomenal returns in the long term. Exiting from land investment is relatively easy.

Residential apartments or floors

The most easily available property type is the residential apartments. However, even after good availability, the new launches by developers do not fall back. Investors still put money in these new launches with the intent of making returns on investment. Gone are the days when investors used to get 50 to 100 per cent return on investment within a few months to a year.

Commercial property

Be it office space or retail, a commercial real estate project has always been seen as a challenge by the real estate developers. Commercial property in an upscale mall and a premium locality has always sold like hot cakes, and are bought by seasoned investors who rely on rental returns.

Lately many developers have come up with commercial office spaces, where they wanted giving an optimistic outlook on the demand for office space in the area the project is located. These are also the same projects which offer assured returns till possession or completion of the building. They are also the ones selling Virtual Spaces.

What to consider while buying a property as investment

• Look for properties with easy exit options, study them finely.

• Choose mid range property as high end property will have minimal capital growth.
• For quick money making, invest in smaller and unique projects with limited availability.
• Do not fall for virtual spaces unless from a good developer.
• Choose land or plots or independent floors over high rise apartments.
• Location plays an important aspect – do not invest in a prospective location which would take a decade to develop. Choose for area under development and closer to existing density.
• Study the reasons of claimed “Phenomenal Development”, “Best Project”, “Best Deal”, “Best Location”.

For a smart investment in real estate today it is very important to have an exit plan ready before entering.

Original publication at Content.magicbricks.com by AtulayNehra