Looking to get ahead in the financial game? Investing in real estate young can give you a solid head start.
However, investing in real estate doesn’t only require an investment in terms of money but time as well.
You need to find a property, get a loan, renovate it, and sell it – all of which takes time and diligent work. While it may seem challenging at such an early age, it isn’t impossible.
So, if you’re a millennial looking to tap into the property market, here are some tips on how to start investing in real estate.
Educate yourself
Young investors who have their eye on property buying must keep up with the complex dynamics of the real estate market. Before you park your funds for the long term, subscribe to blogs, publications, online forums, and learn the fundamentals of property investment.
Keeping abreast with taxation, government policies, home loan interest rates, and property prices will allow you to remain steadfast in all the stages of real estate investment.
Additional Read: Check Out the Benefits of Taking a Home Loan in Your 20s
Develop a rigorous financial discipline
It’s never too early when it comes to saving, especially if you have your eyes on the property market. Engage with a financial planner to build a roadmap and give your savings some structure. As most lenders today need proof of regular savings as part of their home loan eligibility criteria, saving smartly can save you a lot of time, as your loans will be approved swiftly.
Also, if you have any ongoing loans, make sure to close them on, or preferably before the end of the tenure, as it will help you build a robust CIBIL score.
Expand your portfolio
Young investors are often advised by financial experts to diversify their portfolio. Including different asset classes – commercial, residential, and retail real estate – within your portfolio will allow you to diversify risk and protect yourself from market fluctuations.
Consider co-borrowing
It is a healthy practice to share your investment or home loan cost with other investors with financial goals similar to yours. With co-borrowers, you can share the loan amount, brokerage, stamp duty, and additional charges concerning renovation, repairs, or maintenance. It’s another excellent way to minimise your risks, since they will shared equally among stakeholders.
Plan for contingencies
Sometimes, your tenant may not deliver the rent on time, or the property construction may get delayed due to unfortunate circumstances. That’s why your financial plan must allow for such real estate-related contingencies. To tide over such crises, make sure you keep enough funds aside to meet your regular expenses.
Additional Read: Buying a House as an Investment for Future
Now that you know what needs to be done, where should you start? Ideally, you start by finding a property that meets your expectations. Now comes the difficult part – financing the purchase.
One of the easiest ways to buy property is through a housing loan. Not only is it economical and helps you save taxes, but the lender will also thoroughly evaluate the property, ensure there are no legal disputes, and proceed with the loan only when they are satisfied with the asset’s security. As a newbie in the real estate market, this can be advantageous for you. Let us look at some housing loan eligibility criteria.
Criteria for a home loan
While the exact criteria for a home loan will differ for every lender, there are some basic housing loan eligibility criteria that every financial institution will require. These include the following-
1. You must be a citizen of India
2. You must be between 24 and 65 years of age.
3. You must have a stipulated minimum monthly salary and a minimum work experience of three years. In the case of self-employment, you should have worked for a minimum of three years in the same business.
Other than these housing loan eligibility criteria, there are other factors that determine your loan amount eligibility like the value of the property, your monthly income, your repayment capacity, your credit score, etc. Your age at the time of application will decide the maximum tenure for which you can avail of the loan. So the earlier you start, the better.
Are you looking for a housing loan to fund your first property investment? If so, then you’re in the right place. Tata Capital offers custom loans with affordable home loan rates to allow young investors to close a lucrative deal.
We also have our very own home loan EMI calculator to help you with your financial planning. Apply for a home loan by visiting our website today!
04 July 2024
4 mins read
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