Investing In Real Estate? Avoid Taking Multiple Loans

Bangalore: It is believed that real estate market is one among those markets which can never go down and gives better returns over time. To an extent the belief is true that the property prices can never go down by a large percentage but the properties can become stagnant over a period and can give lower returns. The situation has occurred already and investors as well as buyers have faced between 1995 and 2003, Suresh Sadagopan of Business Standard.

Moreover, people started believing that property is a tangible asset and so they have even started taking loans to buy property for accommodation purpose as well as for investment in home and land. Even there are investors who take multiple loans to acquire properties. But the most worrisome matter is that investors as well as end-users need to understand that apart from property loans they have other loans also. Like, people have car loans, personal loans, credit card repayments, and many more. Therefore, people need to consider all aspects before going ahead to take loans for property.

Besides, the EMIs can also increase with the floating rate loans. So, there are people who end up taking multiple loans and their overall loan repayment burden go beyond their income level.

Another important thing people should understand is that no asset class including property will fetch high returns forever. It is true that property prices cannot go down more than 20 to 30 percent but the situation investors faced during 1995-2003 proved that even properties can giver depressing returns if it sits on the market for a longer period of time.

Also Read: Pay 600 Crore for a Two-Acre House in Delhi