Real Estate Myths to Avoid

If you’ve been sitting on the fence about real estate investment, it’s time to jump into the game. And, once you do, your first hill to climb will involve getting your facts straight.

Here are the top nine myths I see spouted almost daily:

1. Investing in real estate is too risky.

Investing in anything can be risky. However, in real estate you have a tangible, hard asset to fall back on, unlike what occurs with the stock market. With the right skills and even just an average housing market, you can do well. But diminishing risk starts with having a viable investment plan and sticking to it.

2. You need a higher education to succeed as an investor.

You don’t have to have a college degree to invest in real estate. In fact, many real estate investors don’t. With the power of the Internet and data, such as pricing history and housing market summaries, researching the state of the market in your area is easier than ever. Reliable real estate investment books and webinars are also plentiful, and are available at a fraction of the cost of a college degree.

You can supplement your basic knowledge with your own research, and the rest will come with experience.

3. You have to be rich to invest in real estate.

Rome wasn’t built in a day and neither were most fortunes. Start with small ventures and find investment partners with similar goals. In real estate, there are also funding options that can help you get started. You can then use the return on smaller investments to fund your next, bigger venture.

4. Investing takes too much time.

You don’t have to be a full-time investor to make money! When starting out, most investors keep their full-time jobs in order to maintain income until they get rolling.

Be forewarned, however, that real-estate investment  tests your time-management skills. You will still have plenty of time to remain at your full-time job, but the reality is that you will say “bye, bye” to your weekends.

5. That late-night TV infomercial real-estate stuff is your only option.

You don’t need to buy-in to a late-night infomercial. We’ve all seen the “Start investing with only $100” ads. But get-rich quick schemes set you up to fail. Instead, by doing your own research and creating your own investment plan, you'll establish a viable path that will have you investing within weeks.

6. You need outstanding credit to invest.

Those with outstanding credit are few and far between. You don’t need the best credit to begin investing, but if your investment requires that you take out a loan (and most likely it will), you do need average or stable credit.

7. You can do just fine investing in the stock market.

“Just fine” isn’t a phrase investors should like to hear. Investing in the stock market is a viable option, but in real estate you have a tangible asset at the end of the day, no matter the outcome of the market. There’s also something to be said for taking something, making it yours and making it better.

8. Only institutions and full-time pros make it in real estate.

As previously mentioned, you don’t need to work in the market full time to make a return on your investment. Most of the investments made in your city’s low-to-medium income neighborhoods came from small-time investors. So, yes, it’s okay to start small! Even the smallest property investments can yield the most desirable return.

9. There is too much competition to be successful.

Never be afraid of a little competition. This will vary by city and neighborhood, but there’s no harm in competition if you can find a property within your budget. There are constantly new properties available on the market, meaning new opportunities for investment. If one area is slow to have properties available, don’t be afraid to look outside the area you originally intended to invest in.

These nine myths have kept many potentially great investors from succeeding, so don’t let that happen to you. It’s time to get in the game now! 

Top Cities for Budget Real Estate in India

Here are 10 cities that offer great lower-budget real estate investment prospects over mid- to long-term.India’s cities draw the most housing demand for reasons like better job opportunities, living standards and infrastructure.However, rapid urbanization and development of these cities into mega-cities have given rise to challenges such as pollution, traffic issues, high property prices, etc.

The government’s initiative to provide ‘Housing for All by 2022’ is being pursued laboriously. The simple motive is to provide affordable homes within the price budget of up to Rs 25 lakh. This vision must necessarily encompass the smaller cities near the bustling cities of India.

Though afford-ability is a relative term, it is pertinent to look destinations where residential properties within the budget range of Rs 30-50 lakh are available, and are classified either emerging or growing sub-markets supported by good infrastructural development. These towns and cities offer a wide spectrum of investable options in real estate with relatively lower price levels, providing the incentives for future capital appreciation and healthy returns.

Hyderabad, Telangana 

After a prolonged slump due to the global recession followed by political turmoil, Hyderabad’s realty market is now once again set for an upswing. Hyderabad, with its buoyant and thriving economy and a dynamic workforce, is once again trending as a buyer’s market. The IT/ITeS industry has given further impetus to the real estate consumer trend, which is evident from the growing demand for residential, commercial and retail spaces. 

Pune, Maharashtra
The perfect blend of Pune’s manufacturing and services sectors makes the city a standalone economic powerhouse in all respects, with a rate of job generation that is hard to match. The city has witnessed steady appreciation over the last few years, and is ranked as one of the best markets for real estate investment. The luxury homes segment has been burgeoning on the Pune’s real estate market, with many large players entering with excellent luxurious projects. However, Pune is now witnessing a slight shift in the development trend. Many new players on Pune’s burgeoning real estate market can be seen venturing into the affordable housing segment. This is obviously the segment where the greatest demand lies.

Navi Mumbai, Maharashtra
Over the last few years, the real estate market in Navi Mumbai and surrounding areas have shown impressive growth, largely because of the planned approach taken towards development. Now, with Navi Mumbai receiving final nod for the International Airport, its property market and that of the surrounding areas have been showing great potential. While property prices have increasingly become unaffordable in Mumbai, Navi Mumbai still provides numerous options for residential housing within the budget of Rs 30-50 lakh.

Jaipur, Rajasthan
Emerging out of its image of being a majorly tourism-led economy; Jaipur has grown beyond everyone’s expectation to become one of the top global outsourcing cities in India. The upcoming IT Parks promise a great future across all real estate asset classes. The 250-kilometer stretch between Delhi and Jaipur has become a hotbed for real estate development, with areas like Manesar, Dharuhera, Bhiwadi, Neemrana, Kotputli and Alwar becoming the new catchwords for investors.

Surat, Gujarat
Surat, known as the diamond capital of the world, is a well-developed metropolis in Gujarat. Rated as one of the fastest growing cities of the world and also recently conferred with ‘Best Urban City of India’ award, Surat has also gained prominence and recognition for being the Cleanest City in India by INTACH. Rapidly improving infrastructure initiatives have helped modernise Surat significantly.

Ghaziabad, NCR
Ghaziabad is an emerging residential neighbourhood of NCR which has a very high supply of residential properties in the budget of Rs 30-50 lakh. Well connected via Metro and roads to the job markets of Delhi-NCR, the city caters largely to the mid-segment home buyers. The city has a high supply of ready-to-move-in properties offered by renowned developers. Some of the well-established residential clusters in Ghaziabad that have gain prominence in the recent time include Indirapuram, Kaushambi and Vaishali. 

Nagpur, Maharashtra
Although a city with extreme climatic conditions, Nagpur is one of the fastest-growing cities in India. Nagpur’s main claims to fame include its MIHAN and SEZ projects. However, with the Devendra Fadnavis-led BJP government taking keen interest in turning Nagpur into the next IT hub of Maharashtra, the city is set for a major transition in its real estate profile. The already-established MIDC corridor along with the upcoming IT parks have made Nagpur one of the cities that bear close watching by real estate investors.

Kochi, Kerala
Kochi is a metropolis in the making where modern urban lifestyles are settling into antiquated old traditions. During the days of its realty boom, Kochi grew exponentially, with more people migrating to the city and consuming even the outlying catchments of Palarivattom, Vytilla, Kakkanad, Edappally and Kadavanthra. Development of IT/ITeS projects such as the Kochi Smart City and initiatives to channelise traffic and improve connectivity, such as the Mobility Hub at Vytilla, have fuelled significantly increased demand for real estate, which more and more developers are cashing in on.

Coimbatore, Tamil Nadu
Coimbatore is the major industrial centre in Tamil Nadu after Chennai — and as incentives are given to IT companies by the Tamil Nadu government, Coimbatore has gained momentum as a preferred destination for IT/ITeS. With the government in power promoting the city by enhancing infrastructure development, Coimbatore’s property market has witnessed an upward push in demand for residential units in the core areas of the city such as R S Puram, Avinashi Road and Race Course, which are considered posh areas. Nevertheless, it has no shortage of affordable housing options. Coimbatore is a market where 40 per cent of real estate investments come from investors living in cities such as Bengaluru, Cochin and Chennai. Apart from the demand from professionals engaged in IT/ITeS, Coimbatore is emerging as a retirement destination, and demand for 2 BHK homes is high from senior citizens. Demand for smaller apartments is primarily from young IT professionals, while villas and row houses see demand from NRIs, retirees and IT professionals with a preference for such properties.

Ahmedabad, Gujarat
Ahmedabad may be the last one in the list, but it is in no way the least. With the city being a prime example of organised and fast-paced development for the rest of the cities in India, Ahmedabad has come a long way. With huge investments pouring into the state, rapid infrastructural development in the form of bullet trains, GIFT Smart City, the entrepreneurial nature of the population and a supportive, stable government, everything is going right for Ahmedabad. The oil, gas and energy industries, petro-chemical industries and automobile manufacturing industries are some of the major factors driving perennial demand for real estate in the city.

US to track secret buyers of luxury real estate

Concerned about illicit money flowing into luxury real estate, the US treasury department said on Wednesday that it will begin identifying and tracking secret buyers of high-end properties.

The initiative will start in two of the nation's major destinations for global wealth: Manhattan and Miami-Dade County. It will shine a light on the darkest corner of the real estate market: all-cash purchases made by shell companies that often shield purchasers' identities.

It is the first time the federal government has required real estate companies to disclose names behind cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers.

Who really lives in all those awful luxury skyscrapers going up all over the US? Increasingly: No one. Now the government is going after the shady, secret deals that are gobbling up the most expensive real estate in most big cities—and destroying the housing market.

According to the New York Times, the Treasury Department will launch an initiative to identify what are called “shell companies”—the corporate entities that purchase large swaths of real estate in the US, usually with all-cash deals. Most of these companies are simply investors who are looking for a place to stash their money. Now these types of purchases are coming under fire as shell companies are also buying up cheaper properties that could be bought by people living and working in those cities, which is adding to the housing crunch.

An investigation by the New York Times last year focused on finding the real owners of properties purchased for over $5 million. In Los Angeles and San Francisco, for example, more than half of these types of residences were bought by shell companies.

Starting with two of the country’s most egregious offenders, Manhattan and Miami, the US will begin identifying and documenting (publicly, I imagine) the owners of real estate purchased through shell companies and all-cash purchases. For the federal government it’s less about how these owners are affecting housing markets, and more about the possibility that they might be able to nail a few criminals. The same NYT report from last year was able to track shell companies that purchased units at the Time Warner Center in Manhattan back to owners who were the subjects of international investigations.

This seems like the right thing to do—with housing being such an issue for much of the country, cities shouldn’t be overrun with absentee owners. But with so many cities in the midst of building booms that are specifically catering to these luxury buyers, this news might scare some investors away. Which may leave quite a few vacancies in all those supertalls going up in Midtown Manhattan.

Snapdeal Launches Real Estate Shopping Carnival

Online marketplace Snapdeal on Thursday launched a real estate shopping carnival called 'Freedom from rent' for its customers on the occasion of Pongal and Sankranti festivals.

The weeklong carnival, which started on Thursday (January 14), will go on till January 20.

Exclusive offers from prime real estate developers like TVS Emerald, Provident Housing, Runwal Group, Atul Enterprises, Lavasa, Central Park, Ajanara Homes, Mahagun India and Gulshan Homz are available at the carnival.

Customers can choose from over 100 real estate projects in cities like Chennai, Bengaluru, Mumbai, Pune, Kolkata, Delhi and others.

Properties ranging from Rs 20 lakh to Rs 5 crore are available at the carnival.During the real estate carnival, Snapdeal would introduce customized offers. Buyers could give budget preference, and developers would promote projects with special offers. The negotiation scheme can give the customers an opportunity to purchase projects at 6%-8% lower price than the market price.

Speaking about the campaign, Tony Navin, senior vice president, partnerships and strategic initiatives, Snapdeal, said: "The real estate category on Snapdeal has received phenomenal response since its launch. This is due to our partnership with trusted developers, technology innovations that allow ease of online and offline transactions as well as exclusive offers for our customers. Through our 'Freedom from rent' real estate shopping carnival, we want to encourage our customers to purchase their own properties."

"Property prices will start from as low as Rs 20 lakh and will go up to Rs 5 crore with a variety of real estate projects on offer," Snapdeal said in a statement.

During the festival, Snapdeal would introduce customized offers for customers. Buyers could give budget preference and developers would promote projects with special offers.

Snapdeal as a marketplace would help in bridging the gap in price with customers and participating Developer/Channel partners. The negotiation scheme can give the customers an opportunity to purchase projects at 6-8 per cent lower price than the market.

"Real-estate category on Snapdeal has received phenomenal response since its launch. This is due to our partnership with trusted developers, technology innovations that allow ease of online and offline transactions as well as exclusive offers for our customers," said Tony Navin, Senior Vice President Partnerships and Strategic Initiatives, Snapdeal.

The apartments offered by banks are not always cheaper

Although the initial price of housing may seem an opportunity to assume a low price, the final cost, including the necessary reforms, it can be high The apartments offered by banks are not always cheaper versus those offered by agencies and individuals. In addition, a lower price is a result of the state of housing and the need for a "profound reform". This is the conclusion drawn from a study by the Organization of Consumers and Users (OCU).

Despite popular belief, the bank is the owner of an apartment is no guarantee that it is a good opportunity. Thus, after an analysis of 54 real estate properties, the study shows that half of the banks visited flooring needed updating, which in some cases had to be completed.

Thus, although the initial price of housing may seem an opportunity to assume a low price, the final cost, including the necessary reforms can be high. Also, keep in mind that at that price must be added the cost of sales, according to the autonomous region, may amount to 14% of value.

In addition, funding is obtained not always an advantage, according to the organization. The usual spreads offered by banks are between 1.6% and 3%, depending on the degree of relationship with the company by recruiting other products. In this context, the study shows that the cheapest differential stood at 0.9% for a flat with a high price.

In this line, the analysis shows that most banks finance 80% of the value of the home, while in 3 cases 100% financing offered, albeit with a less favorable terms for the interest rate and the added expenses.

So, OCU recommends considering that, in comparing prices between agencies, banks and individuals, the latter do not charge commission to the buyer, while some agencies do. In addition the organization advised to invest in housing that exceed four times the net family income.

In this context, he said that the brick has risks, high acquisition costs, taxes and management, and low liquidity. Thus, it states that "there is a comparable investment with fixed term deposits." Thus, the organization indicates that for a housing investment is profitable, the profitability of this should exceed 5% to offset the costs of purchase, the rent, the risk of default and damage.

A simple way to calculate the right price for an apartment

If the rent ten years rather than the total amount invested in a house is recovered, it is expensive

Housing is the most important investment made by most people throughout their lives. Right or wrong at the right price can mean long years of hardships to pay off the floor, with a greater risk if one stays unemployed, or, on the contrary, repay earlier letters without entailing an effort stifling to the family economy. But is it possible to find out what is the right price for a house? It is possible, from the value of rents and in a very simple technique known as 'cap rate', or capitalization rate, which is used by professional investors to find out whether the price of a real estate asset is right, is is undervalued or overvalued.

The capitalization rate applied to housing, is the ratio of the annual rent, net of expenses of community, more than that paid by the floor. For example, if a house is purchased for 300,000 euros and is rented for 2,500 euros a month, the landlord gets an annual income of 30,000 euros. Its capitalization rate would then be 10% and that in ten years would recover the investment in the property. If, however, perceived the rent is 1,250 euros per month, the annual income would be 15,000 euros and a capitalization rate of 5%, which would take twenty years to recover the investment.

The homeowner could have done something else with the money, for example, to acquire public debt to ten years at an interest rate of 3%. Public debt is investment assets considered safer because it is assumed that the State always pays what he owes, at least in the advanced countries. The capitalization rate of real estate assets should obviously be higher than the interest rate on the public debt because investment in them is much more risky. The house will always be there, but while the public debt can be sold in the market instantly, if necessary, the housing can take months, or even years, to be alienated because the real estate market is much less liquid than the debt. In addition, during the time elapsed since the house is put on sale until it, the real estate market conditions may have changed substantially and obtained less money than was originally thought materializes. For this reason, housing investment is riskier than government debt.

This fact follows that if the interest rate on assets such as government bonds to ten years is between 3% and 5%, the capitalization rate of investment in real estate assets should be between 10% and 15 %. Consequently, any cost involving investment in housing, whether rented, can not be recovered within a maximum period of ten years means that housing is overvalued.

Why renting is used as a benchmark to calculate the capitalization rate and thus whether or not a home is overvalued? Because, when renting an apartment, a person or a family you consider your monthly income and you need to spend to eat, dress, go to work, pay for college kids, etc. From there, calculate how much you can pay rent, so that it adapts to real economic possibilities of the family. That rent is the rent you get the homeowner on their investment. Therefore, if you are thinking about buying a home, learn first of the rents of similar dwellings and then calculate the capitalization rate. You will know if you are overvalued or if the price is right.

Things to consider before buying a home

The purchase of a home is one of the most important economic decisions we make in our lives. It is a step that should previously and well prepared. Here are some key things to consider before giving it here

he purchase of a home is one of the fundamental economic decisions, if not the most, we took over our lives. Involves making a significant economic effort into debt for years and even if we have bad luck, so the risk of losing by default on the mortgage. In addition, normal for most people is that the house you buy is where dwell the rest of his days. It is therefore a decisive step, to make it well, you need a lot of preparation.

The first thing to consider is how much money you can afford the home. This issue is too often forgotten during the years of the housing bubble and people came to pay for housing up to nine and a half times the annual income of the family unit, in mortgages thirties. This meant spending more than half of the family income to pay the mortgage, which was a big risk because if one of the two members lost their jobs or their business project broke down dramatically the number of people professional services required, that family would have many problems to face the payment of the bill from the floor. It is recommended that not a home page for more than three or three and a half times the annual income of a family.

Then you have to remember that in addition to price, tackling all taxes and deed costs related to the purchase of housing and related taxes such as the real estate property tax or garbage rates many Councils-. And you also have to include community fees and insurance related to housing.

Once these calculations to see how much it really costs to house one should explore the neighborhood where the property is located and see if there is a reasonable setting shops for daily shopping; bars, restaurants and other entertainment; shopping centers; health centers; etc. It is also advisable to first find out what means of transportation for the district, especially when it comes to new neighborhoods. Do not forget that it is likely many years living in that house and all those things make your life easier.

When you start the process you can go to any agency of real estate, but do not forget that they also have another alternative: specialized Internet portals in all matters relating to the purchase or rental of housing. These portals you can make things easier because you can set the search criteria that interest you, such as location, type of housing, size and number of rooms or price. However, you should note that the portals will only find property information to be announced there. Therefore, it should complement the use of Internet with an on-site examination.

Normal in the process of buying a home is that you take some time to find one that you really like and to your wishes and possibilities, or simply one that suits you fits. Typically, you are having seen several homes before choosing one. In this regard, it should make a picture with the pros and cons of each floor that is visited and relate them to the list of things you want, as the floor is outside or not, whether it is in a complex with gardens and swimming pool, if you have air conditioning, storage and / or parking space, the age of the building, etc. All this will help in the selection process.

However, keep in mind two things. Finding the right home can take time. Therefore, do not be discouraged if you think you have not come up with what you want, do not panic and do not rush. You can, and should, afford to wait until you find what feels comfortable and can afford.