The Complete Guide for NRI Real Estate Investment in India
Through real estate investment, NRIs can generate a decent income. It also benefits them with an incentive to settle in India. By making real estate investments, NRIs can get various tax benefits, for example, exemption from paying wealth tax. Without knowing the key parameters, NRIs may find difficulty while investing in a real estate property in India. The aspects discussed below thoroughly guide an NRI to wisely invest in a residential property in India.
1) Evaluation of financial health:
Before exploring the real estate market, NRIs must evaluate their financial health. They need to analyse their savings, financial obligations, and income sources. They also need to understand credit score and its consequences on loan eligibility. Moreover, they must evaluate their long-term financial goals and know their risk tolerance capabilities.
2) Determining budget:
Without setting a budget, NRIs can’t wisely choose a suitable residential or commercial property. They must decide the amount they can afford to invest without compromising their financial stability. It is important to consider home loan EMIs, down payment, registration charges, and other relevant expenses. To avoid hassles during cost overruns or unexpected circumstances, they must keep a buffer.
To wisely allocate a budget for the desired luxury homes in Gurgaon or other types of real estate property, they must consider the cost structure. It covers the following parameters:
- Basic cost of property (includes base price per square foot and charges like floor rise charges, preferential location charges (PLC), etc.)
- Additional costs (including Goods and Services Tax (GST), Stamp duty and registration fees, brokerage fees, maintenance and upkeep, legal fees, and home loan-related charges)
- Other miscellaneous expenses (including utility connection charges, society membership charges, etc.)
3) Selecting a residential project
Before investing, NRIs need to determine whether they would like to go for ready to move apartment, an under-construction property, or other forms of property. Certain projects are ready to move whereas others are of under-construction and pre-launch type. Usually, real estate investment by NRI can be profitable if they invest in pre-launch projects. The reason is they are commonly available at a relatively lower price.
They must also look for the decent discounts that the promoters and developers of the project provide during the pre-launch stage. Thoroughly researching the Indian real estate market helps NRIs to check the available properties suiting their requirements.
4) Investment funding:
The financial plan of the real estate investment prominently depends on the funding method being chosen. Usually, funding options extend from availing home loans to self-funding. The following section guides on aspects to consider for self-funding and home loans:
Self-funding:
- Using savings is the easiest way to fund the property investment.
- NRIs can liquidate existing assets like mutual funds, shares, or other properties to create the necessary funds.
- They can also cash in on fixed deposits or retirement accounts.
Home loans financing
It is important to thoroughly research and compare different financial institutions providing home loans to NRIs. Subsequently, they need to submit a loan application with the required documentation. After approval, the loan amount gets disbursed (Either fully or in installments) directly to the developer or seller.
NRIs can contact Laburnum Developers which guides them on investment funding options for properties in Malibu Town, Versalia 67A, or other projects.
5) Following legal due diligence:
NRIs must conduct comprehensive due diligence on the entire property. The process involves the documentation of the property regarding the ownership and the sanctioned building plan, height/aviation environmental clearance, etc.
They should also conduct a title certification search for the property to ascertain that the transferor’s title is reliable and correct. They need to take a no-dues certificate for existing water charges, electricity bills, or property taxes.
All dues must be paid and cleared. The existing mortgage on the property can create troubles. Moreover, NRIs must validate that the project is registered under the Real Estate (Regulation and Development) Act (RERA) which ensures protection for buyers.
6) Property purchase:
After thoroughly researching, determining a budget, conducting due diligence, and all other necessary steps, the final step is making the purchase. It involves preparing agreements, making payments, and finally registering the property under the name of the particular NRI.
7) Property management:
After acquiring the property, its management is vital. This is because NRIs may not be always physically present to supervise the property. NRIs can consider the following aspects of property management:
- Search for reputable, experienced management firms or property managers in the property’s neighborhood.
- Outline the scope of their services (may include maintenance, rent collection, handling tenant issues, and certifying statutory compliance).
- Evaluate their fee structure
- Set up a mechanism for regular reports and updates on the property’s contract, condition, and other related concerns.
Conclusion:
NRIs can benefit from profitable real estate investment by following the present guide. These aspects help them make a wise investment and yet stay stress-free.