Tag Archives: Property purchase

Get Returns From Real Estate Without Buying Property: Understanding REIT Investment In India

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REITs must distribute a significant portion of their earnings as dividends to shareholders, making them appealing to income-seeking investors.  

A Real Estate Investment Trust (REIT) in India is a business that owns, operates, or finances income-producing real estate in one or more property sectors, REITs enable investors to pool their funds and invest in a diverse portfolio of real estate assets. These assets may include office buildings, shopping malls, residential properties, and hotels. 

In India, the Securities and Exchange Board of India (SEBI) introduced  REITs in 2014 to allow investors to invest in the Indian real estate market without directly owning the properties. 

REITs must distribute a significant portion of their earnings as dividends to shareholders, making them appealing to income-seeking investors. 

REITs are organized into three tiers: sponsors, trustees, and managers.

  • The sponsor initiates the formation of the REIT by transferring their owned properties or real estate to the trust. Typically, real estate developers seeking capital act as REIT sponsors. 
  • The sponsor appoints the trustee who holds the assets for unitholders.
  • The trustee appoints a manager to oversee REIT assets and make investment decisions. Typically, the manager is a privately held company closely related to the sponsor. 

How do real estate investment trusts work in India?

Consider a REIT to be a real estate-specific mutual fund. Here’s a sample breakdown: 

  • Investors like you can contribute funds to the REIT.
  • The REIT invests this money in income-producing real estate.
  • The income from rents and other sources is distributed to investors as dividends, typically around 90% of their earnings as mandated by SEBI. 

Can you invest in India’s REITs? 

Yes, REITs are listed on the stock exchange, allowing you to buy and sell units like stock. This makes it an attractive option for individuals looking to invest in real estate without the hassle of directly purchasing and managing properties. To invest in a REIT in India, you must typically purchase REIT units through a stockbroker, just as you would buy stock in a company. REIT units trade on stock exchanges, providing investors with liquidity. However, it is critical to conduct extensive research and understand the risks of investing in REITs, such as market fluctuations, interest rate changes, and property market conditions. 

REITs in India 

According to Sebi’s official website, India currently has five registered REITs. These include Brookfield India Real Estate Trust, Embassy Office Parks REIT, Mindspace Business Parks REIT, Nexus Select Trust, and One Real Estate Investment Trust. 

Here are some additional points to consider:

  • REITs are a relatively new instrument in India, with the first launched in 2014. 
  • There are various REITs, each with a specific property (office, retail, etc.).
  • Additionally, consider consulting with a financial advisor to determine if REITs align with your investment goals and risk tolerance. 

Property e-auctions: A new digital method of purchasing properties

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Will real estate transactions continue to slide as the digital age becomes increasingly integrated into our daily lives? Maybe not! We are grateful for the modern practice of online auctions, which allows us to bid on properties from the comfort of our homes. Thus, how does it occur? How does this work? Everything you need to know is right here. For more information on e-auction property, continue reading.

Many banks and private sellers are offering lucrative properties now that real estate auctions are occurring online. But even the e-auction of properties has some tax and legal ramifications that the buyer should be aware of. This article provides information on e-auctions of property, including definitions.

Meaning of e-auction property

The method for selling real estate through an internet platform is known as an electronic auction. It is an open and effective method of purchasing and selling real estate. E-auctions have become increasingly popular in India because they are easy to use and convenient. Interested buyers can submit a bid on the property of their choice during an electronic auction. There is no requirement for physical presence because the bidding process takes place online. It makes it possible for purchasers to attend the auction from various locations. 

E-auction of property: Things to think about before buying

You can improve your chances of making a profitable purchase at an e-auction by taking into account these factors:

  • Examine the property: You might come across conflicting legal titles if you do not finish your homework in advance. Therefore, before attending the auction, verify the facilities, legal standing, address, encumbrance certificate, and outstanding lawsuits.
  • Assign funds: Establish a budget to prevent overspending and guarantee a successful investment. Make sure you know the market value of the property, the potential cost of renovations, and any additional taxes before you make an offer by researching.
  • Know how an auction works: Find out if there are any other costs or fees related to the participation, and be aware of the registration requirements and bidding guidelines. 
  • Verify the seller: Determine whether the seller truly has the right to sell the property by investigating their legitimacy and authenticity. To prevent future legal issues, ensure to gather all required paperwork and confirm their ownership rights. 
  • Examine the property: Examine the property you are considering and search for any issues that could raise the future costs of maintenance and repairs.
  • Seek expert counsel: Speak with a reputable attorney to gain insightful knowledge about the procedure and direction for your choice. 

Property e-auction: Benefits and Drawbacks 

Property e-auctions come with benefits and drawbacks, including:

Benefits

  • Reduced Prices: e-auction properties frequently have lower opening bids, allowing buyers to buy properties at a discount. 
  • Large Selection: More residential, commercial, and industrial properties are available at e-auctions, providing buyers with more options.
  • Transparency: Because e-auctions happen online, the bidding process is transparent, enabling buyers to view the latest highest bid and make well-informed decisions.
  • Convenience: Instead of visiting multiple listings in person, buyers can participate in e-auctions from the ease of their homes. 

Drawbacks

  • Competition: Because e-auctions draw a lot of buyers, there is more competition, which could raise the winning bid amount. 
  • Inspection challenges: Since online auctions frequently offer few opportunities for in-person visits, buyers may encounter obstacles when attempting to inspect the property before placing a bid. 
  • Uncertain property condition: Because e-auction properties are sold “as-is,” purchasers may need to make unforeseen repairs or deal with unexpected issues following purchase.
  • Legal risks: It is crucial for buyers to thoroughly research the property’s legal status and ownership history to avoid any legal complications.  

PRECAUTIONS TO BE CONSIDERED WHEN BUYING A PROPERTY

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  1. Clear title is a necessary prerequisite and thorough due diligence when
    purchasing a property:     It means when a home with a clear title is transferred to
    someone else, that person becomes the sole undisputed owner, and no other
    the party can make any kind of legal claim to its ownership. See the titles of the
    document of the last 40 years.
  2. No encumbrances or liens: such as taxes and loans: please check that the
    property has no previous taxes pending or previous unpaid loans.
  3. Make sure that the sale deed includes no conditions: It is important that the
    the seller clearly states whether or not there are any conditions attached to the sale of
    the property, such as a no-return policy or other contingencies.

DESCRIPTION

To make sure that you get a good deal when you buy a property, there are certain
factors that you should consider and precautions that you should take. A clear title,
along with no encumbrances or liens. To ensure thorough due diligence when
purchasing a property, make sure that the sale deed includes no conditions such as
restrictions on future mortgage payments or other restrictions on the use of the property.