Investing in property is not simple. We need to decide the where, why, when and how before we risk our money. The ‘where’ factor in particular bears great importance especially if you want good returns from your investments. You can either invest locally or explore investment options outside your state.
Here are some factors you need to consider before you invest:
Advantages of investing locally:
● The local real estate market is a familiar territory. Also, even if you are not familiar, you can still trust a person to guide you in your venture.
● You are aware of the culture and trends of your local area. This will help you predict the direction in which real estate development is headed in your area.
● The media and advertisements cannot necessarily fool you into making a bad decision because you regularly monitor the property you intend to invest in.
While you can rely on familiarity as an important factor, there are certain risks you cannot ignore. Here are some drawbacks of investing locally:
● You may not get the optimal value for money that you hoped for; the market you live in might be very expensive (especially in cities like Mumbai).
● Only looking at your immediate area narrows down your options considerably.
These disadvantages could drive you to look at property out of state. While investing in property out of state can be daunting - because it is an unchartered territory - it also has certain benefits.
● No market is out of bounds once you decide to pursue land out of state. Your investment option increases manifold.
● You can choose a thriving real estate market without compromising your budget. In fact, you might even get better returns than you might expect.
However, investment made out of state come with certain risks; here are some of the disadvantages of investing out of state:
● Investing out of state is literally entering unchartered territory. You can make an informed decision and do all the research you need to, but you will still not have the intimate day-to-day knowledge that you would have of the local market.
● There will always be a fear that you might get cheated or that the real value of your investment is less than its face value. Trust will always be a serious concern in an out of state property investment.
● You will also need to start from scratch in finding quality professionals such as real estate agents, property managers and workers. These people are instrumental in zeroing in on a good investment; your choice will dictate the failure or success of your investment.
Knowing the pros and cons is important when such heavy investments are involved. This is why one must diligently monitor the real estate trends of the chosen location.
It is important to realise that real estate investment is all about having options, especially about where you want to watch your wealth grow and expand, whether it is local or out of state.