Real estate market and investments in the market comes with a lot of risks. A lot of care has to be taken while investing. Comparatively, people have a notion that the real estate market is the ideal one for investment than other classes of assets. However, the scope for profit depends on many factors, including the investment amount and the property type.
With the market witnessing the amazing development along with numerous reforms, it was preceded by a long stint of slowdown. Not only in India, a major recession was witnessed and impacted realty throughout the world. Recently, the new flats for sale in Chrompet witnessed very good sales because of the RERA reform which induced the much-needed transparency.
In the real estate market, the most prominent and happening section is the residential sector. Lenient rates of interests for home loans, the growth of nuclear families, a rapid development of the middle class and disposable income are a few of the reasons for this hasty growth in the residential realty sector.
While investing, amateur investors purge a lump of money looking for high returns over the years. Most of them do not consider the risk factors of the sector and they get involved almost with no caution. The truth is there are a lot of risks in the real estate market. And knowing them in complete awareness are one of the key aspects of proper and safe investing.
Here are some of the risks involved in the same:
1. A vital risk factor to consider is the age and condition of the property to invest in. If the property is aged, but in a developed location, then there are good chances of returns in the future. If it has huge maintenance and repair needs, then the cost of reconstruction might affect the profit in returns in the future. So it is advisable to go for new and financially feasible properties like the flats for sale in Pallavaram, Chennai.
2. There are a few amateur investors who purchase a residential property at a really low price and keep it for a decade or so to allow the property value to appreciate in value. When the property is held over time, there are a lot of other expenses made until it is sold like restructuring and repair costs. Moreover, there is no assurance that the property value will increase over time.
3. In commercial realty sector, the components of investments are office spaces and centres for business administration given for rent or lease. The risk involved in this sector is minimal, but the initial investment is high and the returns are also high. Prime locations are the ideal one for commercial properties and they should be stable. Tenants in this type of property stay for a long time because of the huge amount involved.
4. Another type of property with very high risk and a good possibility of returns are foreclosed properties. Even experienced investors with a good portfolio do not consider going for this kind as it comes with huge risks. With proper knowledge about the property and by calculating all the ramifications, even a foreclosed property can bring in a profitable return in the future.