When do you consider an investment smart? It is when the returns are high. That is why real estate has been a viable investment option for many of us. Although the property buying process has evolved, it has become an enriching experience for home buyers as it is a lucrative option in the long run. The property value hardly ever depreciates and there is always a demand, making it the most preferred asset. Here are a few tips if you are looking to invest in residential real estate.

Analyse Purpose of Investment: If you are buying a property for rental profit, you will have to study the market trends and keep in mind the prospective tenants. But if you are looking to buy a property for your use, you must evaluate your needs, family strength along financial health. Once you are clear about the purpose, you will be able to make a good investment decision as the value for real-estate properties can increase over time.

Do Thorough Market Research: Given that investing in real estate is a big financial decision, it will require you to take out a significant amount of your time to do thorough homework about the type of property and the area of preference that falls within your budget. For instance, if you are looking for a property to move in with your family, you may have to research which area is closer to good educational institutions and safer for kids. Do not restrict market research at the budget and location, instead, ensure to check the builder/seller’s track record for past transactions. Once shortlisted, it is also important to examine the condition of the desired house by evaluating flaws, potential threats, and damages that can be missed easily.

Use PropTech: The way we look at real-estate investments has changed since the boom of PropTech. Tech-enabled solutions like artificial intelligence and machine learning have made home-buying decisions easier for customers with the help of home video reviews, virtual house tours, and digital real-estate expos, among others. The online property aggregators also help in comparing property prices so that you can analyse the features and facilities provided.

Evaluate Prospects of the Area: Price and location could be the most basic search preferences while shortlisting properties. While you look for these obvious parameters, don’t forget to also consider the prospects of the locality as real estate is a long-term investment option. As a buyer, you must also check whether the area’s infrastructure will improve because any scope for better connectivity can result in an increase in the property value in the future. Ensure to look for developments in terms of marketplaces, residential and governmental complexes, schools and colleges, and connectivity.

Calculate Final Cost: The total cost is not merely about the property price, it is also about the extra charges for preferred location, furnishing, parking charges, and other developmental fees like GST and stamp duty, among others. It can lead to an aggregate cost that exceeds your expectations. Hence, while planning the budget, include these charges along with the property price so that you will not be overwhelmed when you start the process.

Know Your Credit Score: Did you know that a higher credit score can get you lower rates on home loans? Yes, a good credit score means you get the best rates on home loans. If you are applying for a loan, the provider will do a detailed check on your credit history. So, maintain a good credit score always and check for the score before applying for a loan.

The author is VP – Commonfloor, a Quikr Company

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/organisation directly or indirectly.