Capital gains tax information for NRIs

Investment in real estate has the potential of earning high returns. However, like any other investment, trading in real estate is not without risks. Property dealings can become a handful, especially if you are an amateur in this field. Here are a few mistakes that people often make.

Not thinking matters through

Real estate is a big investment. It is something that most people go in for only once in their lifetime and it may be a decision that affects their lives in a big way. However, a common mistake that investors make is not to plan their purchase. It is important to think things through before you put money into a property. Your plan should cover all the factors that are necessary to reach an informed decision � the type of property, the locality, the rate of return you seek, the purpose of the purchase, budget and more.

Money matters

Real estate should not be a matter of impulse buying. Often people make the mistake of going overboard on the cost of the house, thinking that they can make up for the shortfall in funds sometime in the future. Get your finances in line first. Talk to your financial advisor and also work with your bank on the loan amount before you finalize your purchase. Once you know your budget, do not exceed it.

Market research

A common mistake � people try to isolate their deal from the market environment. The property prices, value appreciation and your bargaining capacity all depend on market trends. A thorough study of market trends will also help you forecast the growth rate of your property.

Flexibility

One cannot make hard and fast rules for a real estate investment. People often have a fixed set of ideas as to what they wish to do with the property. However it is important to keep room for changes, to maximize profits from your investment. For example, if you cannot find a good buyer immediately, your plan should be able to accommodate renting out the property for a while before finally selling it when the market is right. Have a contingency plan ready.

Property is an investment that often has emotional associations that could skew your decisions. Today there are professional courses where one can understand the protocol of real estate investing and also be educated about the common errors people make.

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