A Millennial Home Buyer's Checklist Before Investing in Real Estate
There are important aspects for millennials to be factored in before investing in their dream home
With the Covid-19 pandemic forcing governments to enforce strict lockdowns since March last year, companies were quick to adopt remote working options like Work from Home (WFH) to ensure business continuity and guarantee employee safety. This situation has had many think about the way they spend time at home, about their homes and future plans.
In addition, the low-interest rate regime, stability, and clarity due to the implementation of RERA are giving confidence to millennial homebuyers to get onto the real estate ladder. However, compared to renting out a house, purchasing a house involves a lot more research, meticulous planning, and deliberation since it will most likely be the biggest financial decision for most people. Therefore, for millennials on the lookout to purchase their first home, there are some important aspects to be factored in before investing in their dream home.
Financial Planning - Understanding one's financial ability to arrive at an estimated budget is possibly the most important factor before going ahead with any purchase. It would be prudent to start with assessing one's credit score to understand the quantum of financing that would be cleared by the financier. The loan amount should ideally not exceed 60 times the monthly take-home income to prevent any undue stress on personal finances in the future. Combined with other surplus capital at hand, one can then arrive at the overall budget for investing which will then serve as a guide to decide on the location of the property, configuration size, and property type.One also needs to keep in mind the asset maintenance cost and renovation expenses as a part of the decision-making process. As a final word of advice,
Identifying the right real estate consultant/broker - There are a plethora of real estate aggregators online that can be explored to understand Project and Developer options available in your preferred locality. Alternatively, and we suggest, you should engage with a real estate consultant/broker who will help you with detailed information and understanding of the micro-market one is investing in. Brokers have a good pulse of what are the prevailing rates in the project, locality, what the absorption levels have been - all of the above help in making an informed decision. The broker will also facilitate the paperwork, assist in coordinating with legal teams, the registrar's office, etc. which can be a painful process for a first-time buyer.
Identifying the Project - this is one of the most important aspects of your investment journey. With your real estate broker, it is important to identify a developer with a good track record. For ready or under construction projects, one could directly approach developers having a consistently good track record in delivering quality homes. With RERA in effect across the country, it is possible to understand the finer nuances of a new construction project online and aids in conducting due diligence. It would be recommended to opt for a ready-to-move-in unit considering the fact the construction quality levels are confirmed before purchase.
Lastly, it is important to check the connectivity of the home location to major travel hubs as well as proximity to schools, parks, and playgrounds which is important for families with young children. Hence, it would be prudent to factor them along with an understanding of the neighborhood and the future infrastructure development potential on offer. These additional considerations can help you in making a much better new home selection that will serve as a better long-term investment as well.
The author is Founder, SILA
DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organization directly or indirectly.