The real estate industry continues to be one of the best investment avenues that promise long-term capital appreciation. However, investing in real estate for beginners can be challenging. With the right approach and skillset, you can capitalize on the growth potential of this industry.
As you know, real estate investments can be rewarding when you know where to invest and when to buy these properties. While the financial benefits can be impressive, the field can be complex as well. Currently, the real estate industry in India is valued at $280.4 billion. It is projected to grow consistently in the next decade, with the demand for quality homes increasing in the country.
Real estate investing for beginners can be challenging, particularly when you get started. It’s easy to get confused between different types of real estate transactions. The nature of property buyers varies, and the waiting periods tend to differ. Ultimately, you need to master certain skills before you can confidently invest in real estate in India.
In this guide, we have explained five crucial skills you would need to succeed in this front. However, let’s check out how you can make money by investing in real estate in the first place.
One of the best things about real estate investments in India is that, you can earn consistent returns even during times of inflation or rising interest rates. Depending on your available funds and risk tolerance, you can make the investment. Here are four ways in which real estate investors can earn impressive returns.
Over time, the value of real estate keeps appreciating. So, early investors can benefit from the property value increment in the coming years. Selling off your property at a higher value in the future can fetch you impressive returns.
As a real estate investor, it’s imperative to choose popular localities witnessing value appreciation of homes. Over the long term, property values increase in these areas faster than other areas. When you sell off the property, you earn a one-time payout, which is significantly higher than your purchase price.
If you are wondering how to start investing in real estate, it’s advisable to invest in properties that can fetch you rental income. When you own a property and put it on rent, you earn a predictable and regular amount. This cash flow brings you a passive income, whether you go for short-term leases or a vacation rental.
When you rent out the property as the landlord, you are responsible for making emergency repairs or collecting the rent. In case you own multiple properties, you can work with a property management company. These professionals can manage the rental investment property to maximise its income potential.
Although flipping properties can yield lucrative returns in the short term, it can be a bit challenging for beginners or first-time investors. It involves purchasing an under-priced property from the local market, carrying out some renovations to enhance its value, and then selling it off at a higher price.
Flipping properties can fetch impressive profits, but you should have a realistic idea on the market conditions. Also, investors should be aware of the estimated costs required for repairs and renovations.
If you are wondering how to start investing in real estate for property flipping, it’s recommended to connect with contractors who can help you with realistic estimates for the repair costs. This way, you can decide whether or not to purchase the property.
When you think of real estate investing for beginners, REITs are a great avenue that doesn’t require you to own a property. Still, you can generate income from the real estate market. Most importantly, you need not need a large capital that you would require in the case of buying real properties.
REITs act like mutual funds and are owned by a company financing the properties. People invest in REITs, which are publicly traded. It is similar to investing in the stock market. If the REIT makes profit in the market, you earn dividends, which you can reinvest or cash out.
So, with REITs, you don’t require the large upfront payment. However, when you cash out the dividends, certain taxes will be applicable on the income.
Now that you are aware of the different ways of making money through the real estate industry, we’ll explain the skills that are crucial for investors to succeed in the real estate market.
As a real estate investor, you must have a strong knowledge of the contemporary market trends and listings in your targeted locality. Remember, real estate investments involve significant amounts, and you should know the correct value of homes if you are to profit from the deal. Consider the landmarks located close to the site and the most lucrative places to invest in.
When you are aware of these trends, you can generate multiple leads. Also, stay in touch with influential people in the right area that will help in maximizing your income. Proper market awareness is necessary to recognize the city or neighborhoods that are presently in high demand. Also, keep track of how government or private projects in the locality are impacting property prices.
As a property investor, having great negotiation skills can help you crack lucrative deals. At times, you need to convince sellers of impulsive financial decisions. Being tactical, you can also negotiate to lower the price of the property. At the same time, property investors with strong body language can express their interest in a home. Avoid expressions like frowning, which can negatively affect the outcome of the property deal.
Also, refrain from making a lowball offer, which might turn out to be disrespectful. However, try to remain over the market value, so that the seller is prompted to make the desired move. Collect all the available details on the downsides of the property, so that the owner gets the impression that the property has certain drawbacks that affect its market value.
Most importantly, if the deal seems to be non-profitable, learn to say ‘no’.
Communication skills play a critical role for real estate investors in India. Being a new investor, you will be interacting with different individuals like property managers, real estate agents, tenants, and contractors. Proper communication skills can significantly influence the outcomes of your investment.
Communication isn’t just restricted to speaking skills. In order to understand the perspectives of others, you need to be an active listener as well. This way, you can build meaningful relationships and make informed decisions, closely paying attention to what others say.
In order to have fruitful conversations with experts in the industry, try to tailor the style in which you communicate. Get familiar with certain terms real estate investors use, which will help you build credibility as it demonstrates your knowledge.
Real estate investing for beginners isn’t always free from hassles. You might encounter unexpected challenges along the way. This is where problem-solving skills come in handy. For instance, property owners often deal with difficult financial scenarios and tenant issues. Therefore, you need to cultivate critical thinking abilities and should be able to analyze scenarios.
It’s important to find creative solutions even when you are under pressure. Real estate investors should adopt a systematic approach to deal with these problems, increasing their chances of success in the competitive market.
Let’s understand how problem-solving skills can help you in the real estate sector. Take the instance that you have let out your property. A key electrical issue arises, which causes a major challenge to your tenants, which can trigger safety issues leading to their displacement. This is a challenging problem, and you need strong problem-solving skills to evaluate the situation. Accordingly, you can contact the necessary professionals and communicate your action to your tenants. Also, it is important to minimize rental loss by retaining your tenants and balancing the costs of repairs.
Investing in real estate for beginners can be particularly lucrative with effective advertisement and sales skills. Once you find a property, you need to communicate its features and values effectively to potential partners, tenants, and lenders. Social media is a powerful tool in the digital age that helps in effectively communicating these aspects.
Those investing in real estate in India must build a strong online presence on platforms like Facebook and Instagram. Share detailed property tours and attractive photos and develop connections to attract potential clients. These attractive listings can help you find buyers for your property quickly.
Check out these guidelines for effective advertisement that increases your sales and helps you strike profitable deals.
• Respond to the messages and comments of your audience to maximize engagement
• Showcase your achievements and experience on social media profiles to demonstrate your expertise
• Address critical concerns and communicate with data-driven responses
• Get your property registered online and reach out to satisfied clients to collect reviews that will make your profile more credible
• Track your online performance using analytics and accordingly, adjust your strategy
Also Read: 5 Simple Ways to Invest in Real Estate in India
Now that you know how to start investing in real estate and the key terms to be familiar with, let’s check out some of the common terms used in this industry. This will help you communicate effectively.
• Cash flow: Cash flow refers to the amount of money you generate from the property and subtract associated expenses like operating costs from it.
• Due diligence: Often, real estate is a huge investment. Before investing in properties, it’s imperative to research the property and review crucial documents to understand its legitimacy and maintain transparency. Also, you need to estimate your operating expenses and evaluate the risk of investing This entire process comes under the ambit of due diligence.
• HOA: HOA stands for Home Owners Association, the body responsible for overseeing apartments and residential complexes. When you purchase a property in an HOA community, it’s essential to adhere to the rules of the association. Remember, these rules can have an impact on your ability to let out the property or carry out specific renovations. Investors may also have to include the requirements of the HOA in the rental agreements, like maintaining landscapes or lawns.
• Turnkey property: Properties that are ready to move in are referred to as turnkey properties.
• Inspection contingency: A common term included in contracts, inspection contingency is a common term included in property contracts. It implies that the buyer needs to get the property inspected and review the report before the sale. The pricing of the inspection will determine the price of the property.
Investing in real estate in India is a strategic decision, but you need to master the skills we discussed in this guide. If you aren’t sure how to approach a deal, feel free to reach out to one of the trusted property brokers. The professionals can guide you through every step, helping you get started with your property investment.
In fact, investing in real estate for beginners can be challenging without professional insights. With the right approach, you can manage these investments and maximize your returns.
FAQs
First-time investors in India must get started with residential properties. Particularly, invest in single-family homes, as these are ideal for investing in real estate for beginners due to their manageable risk and lower entry costs.
Experts consider the metro cities to be the ideal places for real estate investing for beginners due to the high demand for properties and their price appreciation.
Some of the common mistakes for beginners to avoid in the real estate sector include the lack of due diligence, underestimating costs, and overleveraging finances.
Your investment goals largely determine the type of property that would suit you the best. For steady rental income, go for residential properties. On the other hand, commercial properties often fetch higher returns but come with a higher risk.
