Real estate investment is often considered the safest option, and many experts believe the chances of loss are minimal.
Real estate investment is still considered safe and profitable in India, but the reality is that most investors are incurring losses. According to recent reports and expert opinions, approximately 90 percent of real estate investors in India are either losing money on their investments or not receiving the expected returns. The primary reason is poor decision-making, investing at the wrong time, and making impulsive decisions without a plan.
In the past few years, property prices in urban areas like Noida, Gurugram, Mumbai, and Pune have increased two to three times. While this sounds incredibly attractive, only a select few investors have benefited from these price increases. The rest are either struggling to pay EMIs (Equated Monthly Installments) or are trying to sell their properties.
What do the experts say?
According to Aishwarya Shri Kapoor, a Gurugram-based real estate consultant, the true face of real estate investment in India is quite different. In a detailed analysis, she stated that most investors get emotionally involved in the decision to buy property and therefore face losses. In her opinion, only one percent of investors are actually building wealth through real estate.
What are the most common mistakes?
The common mistakes made by investors include:
- Investing at the wrong time: Many people invest during market booms, when prices are at their peak. Buying property at such times is not an investment but rather a way to burden oneself with a high-priced asset.
- Decision-making without research: Many investors look at several projects in a single day and choose the cheapest or the one with the highest discount. They neither evaluate the project's location nor the developer's credibility.
- Emotional decisions: Sometimes, people buy property simply because it is near their office or children's school, or because a relative lives there. Such decisions often prove detrimental in terms of long-term returns.
- Ignoring liquidity: Real estate is a low-liquidity asset. This means that if you suddenly need money, you cannot immediately sell the property. Many investors overlook this and get stuck.
Why is pre-launch investment beneficial?
Investors who are getting better returns from real estate generally invest during the pre-launch stage. At this stage, property prices are relatively low, and as the project is completed, prices naturally increase.
Such investors keep the following in mind:
- They check the developer's credibility.
- They assess the legal documents and approval status.
- They research the project's location and surrounding infrastructure.
- They set entry and exit deadlines.
- They make their own decisions without being pressured by brokers.
Property becoming a burden of EMIs
A major problem is that many people consider buying a home as an investment, while in reality it is an expense unless the property is generating rental income or returns. Paying hefty EMIs to the bank every month and not being able to use the property for several years proves to be a losing deal.
Should you invest in real estate?
Investing in real estate is not wrong, but it requires planning, understanding, and patience. If you are buying a flat just because everyone else is or because a broker advised you to, it is a weak strategy.
It is important to ask yourself these questions before investing:
- Can this property provide me with regular rent?
- Is its price likely to increase in the next 3-5 years?
- Is the developer of this project trustworthy?
- Is this better than alternative investments?
- Will I have to take a loan for this, and will that loan worsen my financial situation?
No investment without a strategy
Like every investment, real estate also requires a strategy. You don't invest money in an SIP, FD, or stocks without thinking, so why invest in a large investment like property without a plan?
A smart investor is one who:
- Waits for the right time.
- Understands the location and market demand.
- Plans for 3 to 5 years.
- Evaluates cash flow and returns.
- Makes data-driven, not emotional, decisions.
