5 Smart Ways to Evaluate a Location for your New Home

5 Smart Ways to Evaluate a Location for your New Home

homeswing-home-search-near-locationYour reasons for buying a house may be many – a good rental option, a place to settle down, an upgrade from your present housing or even an investment for a future transaction.

Irrespective of the reason, you are looking to invest in a home that has the potential to grow in value as an asset.

Whether you are a buyer or a renter, you must, by now, have a good idea of where you would like to live. The area may have several draw factors – proximity to your work place, schools and medical facilities or simply the potential to appreciate exponentially.

No matter what the benefit of the particular home, you must not negate the importance of your location at any point. Here are five ways to evaluate the location of your potential home:

1. Research the Growth of the Location

Connect with a good real estate agent or do your own homework for this. Look into the growth of the location over the years. Has the growth been steady? Do real estate agents still believe in its potential to grow? Let your research go back at least a decade and look over the figures. Ignore the few small dips you see that may be market related.

There may be two outcomes to this – you may find that you have the perfect location that has all the potential to grow. Or, you may find that you have the ideal property, in an area that is virtually saturated and thus end up with stagnant growth rates.

2. Evaluate Amenities

Even if you are yet to start a family, it is important to evaluate the schools around you. These are details that come in handy when you plan a family. This is also important if you plan to sell the house at a later date. Families look for quality schools and this can be a huge draw for a potential renter or buyer.

Besides schools you will also want to look into medical facilities around you as well as your options for entertainment. If you have ailing members of the family, specialized care in the vicinity must be evaluated. Your social life will also determine the kind of entertainment options you will want around you.

3. Enquire on Job Opportunities

 If the location you are evaluating is placed in close proximity to a commercial hub, this can open a world of opportunities. New job opportunities may come closer to home than before. This is also a factor that many people looking to rent or buy would like to ascertain.

Look into the current job market at the selected location. Also make enquiries on the newer companies or tech parks and the like that may be setting up here.

4. Check on the Number of Homes that are listed for Sale

It is important to know the number of homes that go on sale, on average in your location. This will help you understand two things – the first, if a property is truly great and appreciating in terms of value, then you will find only a few properties listed.

Alternately, more the number of sales signs, more you need to research into the feasibility of the location and what it may be possibly missing. A general rule of thumb –lesser homes on sale in a locality make better investment options.

5. Spend Some Time Experiencing the Location

 It is important for you to get a feel of the location. Drive to your workplace and back in peak hours. Do a school run during the right times to see how long it takes. Make a mental checklist of all the amenities you like to have close by and go to each one of them and understand how they fit into your lifestyle.

Also evaluate connectivity to other parts of the city and public transport options among other things.An ideal way to summarize your evaluations is to compare 2 to 3 of the top locations on your list based on the above parameters and narrow down on your choice.

Once you are done evaluating all these aspects, it will become clear to you, if this location is the right one for you. Take the time out to do so, as a home is a long term investment of your hard earned money. It is also a large financial commitment.

Take-Aways

  • Irrespective of why you are buying a home, evaluating location is important
  • Evaluate a location from the perspective of a buyer that may look to sell in the future
  • A location’s growth pattern is an ideal benchmark of its quality
What Matters Most : Location or Property ?

What Matters Most : Location or Property ?

location_locationIt was a pleasant family get together over the weekend at my friend’s home located in the Central Business District (CBD). Satiated after lunch, everyone picked corners to settle down and start the conversation.

My friend and I were nursing our coffees when the talk took towards investing in a new home. I was a bit taken back that my friend was considering a new investment.

Here he was, located in the heart of Bangalore city, looking to find another home in Electronic City, the upcoming IT hub. Why? It’s because…his job requires him to be there through most of the week.

His wife has a job in the same vicinity and they have their child admitted to a school close to their office for convenience of pick up and drop.They had purchased their home in the CBD over a decade ago and today, the relevance of its location has changed for them.

This led us to think on how relevant the location of where you purchase your house is. So, buying a new house is not just about finalising the property anymore.

With newer infrastructural systems coming in place – highways, ring roads, flyovers, bridges as well as the Metro trains, distances are becoming shorter and perhaps the focus on amenities like living in ‘green’ corridors and other such factors are gaining significance.

So, the final decision of purchase depends on your personal needs. If you are unsure of whether the property is more important or the location, here are some points to consider:

  • There is More to a Location than Geography: Yes a good location is about being well placed from office, school and other facilities, but it is also about being placed in a safe neighbourhood.It covers the aspect of you being among like-minded people, good civic facilities and in an area which has appreciation potential. You have to remember that you can always change the way your property looks, but there is scarcely any scope of changing your location once the purchase has been made.
  • The Right Location Can Be a Money-Saver: If you plan to buy a home in an upcoming location to save on money, this may not be a good idea. You may spend on several additional things to bring the property up to your standard of living.Instead, investing in a property in a more central location in relation to your needs may help you save money on other aspects.

These two considerations bring us down to the fact that location, though still important has several more meanings to it today. Here are some aspects associated with it:

  • Geographic location
  • City or Suburb and where you would like to be placed
  • Neighbourhood and safety for your family
  • Proximity to school or office
  • Proximity to medical facilities (especially when you are living with senior citizens)
  • Proximity to friends for socialization opportunities
  • Entertainment options
  • Society’s viewpoint of the location. Location may also be perceived as a status symbol

There are several aspects for you to evaluate when you are examining the location of a potential property. Trying to understand what your needs may be in the short and mid-term will help you make a better decision on the location of your home.

Take-Away

  • Location, though important even today, has several new aspects to evaluate
  • A property may be modified, but a location cannot be
  • Placing your personal needs, current and future in perspective will help make a better decision on location.
No EMI till possession – is it worth the risk

No EMI till possession – is it worth the risk

emiPramodh and Meera, currently in a rental home, are on the lookout for a good property to invest in. Like any other young couple starting out and planning a family, they have had to cut a few corners to make the initial down payment.

While hunting for homes, they came across some builders offering them the “no EMI till possession” scheme. Unsure of the benefits of such a scheme, they decided to look into what this entails. Here is what they found.

Why the No EMI scheme came about: The real estate community is often at the receiving end of volatility in prices. Blame it on the markets that affect buying power.

The onus then falls on builders to come up with innovative ways in which to promote their projects and get potential buyers to invest. One of these schemes is that of “no EMI till possession.”

By taking on the burden of EMI of the shoulders of the customer, builders make it more feasible for buyers to invest in a home. They will not have to worry about paying a rent, while also paying an EMI for a home.

What is the No EMI Scheme: Also called the subvention scheme, this is primarily a financial structuring scheme that works on the principle of 20:80. As a property buyer, Pramodh and Meera will have to pay only 20% of the property cost upfront to the builder. All EMIs will then begin only after they have taken possession of their home.

Till the time of possession, EMIs are paid by the developer to the bank, instead of the home owner doing so.

    You will have to do your research on the kind of No EMI scheme being proposed.

  • In one, the builder pays a part of interest and principal on your EMI to the bank in a reducing format for a fixed period of time.
  • In another, they pay only the interest and the principal amount is deducted from your loan account.

So what are the potential benefits that Pramodh and Meera may look forward to?

Better financial planning:

With such a scheme in place, Pramodh and Meera may plan their finances well. They will continue to pay a rent, while building up resources to pay a regular EMI after possession of their new home.

Timely completion:

Since the builders are now paying the EMIs on behalf of their buyers, the pressure to complete a project on time is higher. This works to the benefit of the buyer who will be ready to move into a home of their own and stop paying rents.

Better value for appreciation:

Paying 20% of the down payment at the time of booking and then holding onto the EMIs till the construction is complete allows the buyer to reap better benefits from appreciation.

A project may take approximately 3 years to complete. At the end of 3 years, there is a natural appreciation in price, one that the buyer will be able to benefit from more considering he has only made a down payment based on a lower price rate for the property.

What you have to be careful about

Like all interesting schemes, there is a fine print that you need to look into. Here are some points to keep in mind:

  • You need to dig deep into the financial structuring of the scheme and check on whether the builder is actually paying the entire EMI. There are chances that instead of absorbing the EMI, it may be passed down to the buyer through a higher price point. You will also have to check on whether the builder has successfully completed such a scheme in an earlier project.
  • Check to see if there is a time limit on the number of years that the developer will pay the EMI. Many builders cap the number of years at 2, irrespective of whether the construction is complete or not. This may not work in your favour.
  • Always keep in mind that if the developer defaults on the EMI payment, then you will be liable to pay the same and the bank will hold you accountable.

The best thing for Pramodh and Meera to do is to find a property that is being offered at close to market prices for that particular area. If this property is available under the “no EMI till possession scheme”, then it may be worth their while.

They will still have to do the necessary groundwork to ensure that they are making the right decisions.