Thursday, June 17, 2010

Buying Commercial or Residential Property? Read this....

You can buy a residential or commercial property which is under construction or ready for occupancy. However, there is a lot of due diligence that you need to do before taking it up. The first thing you need to understand is the demand-supply situation in the area.

You need to ask questions like what other projects are coming up in and around the area in the near term. Secondly, you must do some homework and find out details about the builder and check his ability to deliver in the past. Take a look at the quality of construction of his previous properties.

Last, but not the least, floor choice and view from the flat is very important. Many a time, builders try to sell you flats that are least saleable — maybe the last floor or the first floor.One must remember that while there are penalties on individuals if they do not make payments on time, there are no penalties on builders who do not deliver on time. Besides that, one has to also keep in mind costs, such as stamp duty and registration, which could dent your returns.

The developer may ask for the car parking money in cash. If you want to sell your property, the developer may levy a clause that you need an NOC from him for which he may charge you. This is especially true if you are selling the flat before builder completes the entire project.

So, you must keep that margin in mind while making your calculations. The other option could be to buy a commercial property and rent it out to earn rental income. Here one must calculate the kind of returns which one can get before getting into this.
Courtesy: Economic Times

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