Investing in real estate may seem to be a tricky business for the uninitiated. However, it is not as difficult as it may appear. If you follow the key guiding principles of long-term investing, you can earn much higher returns than most other debt instruments.

 Here are some of the most important things to keep in mind while investing in real estate.

1. Location

 There’s no gainsaying the fact that location is everything when it comes to real estate investment. A property can yield returns through rent and capital appreciation. It is worth recalling that both these rent and appreciation depend heavily on the property’s location. If the location has sparse population and negligible signs of development, then the chances of getting high returns are less.

 On the other hand, if the percentage of vacancy in a location is less than 5%, then this means the demand side is fast catching up with supply side. In such location, one can expect to see a lot of new customers and existing tenants who are less likely to vacate. This leads to higher rents and capital appreciation.

2. Quality

 Sometimes two projects will fetch different returns in spite of being in the same location because of the quality of the property. Not only will the project with better-quality always get rented first, but also attract better quality of tenants. Needless to say, it will fetch the investor higher rents in the long run, better tenant retention as well as higher capital appreciation. Many tenants do not mind paying up a little extra if the project enjoys good ratings, has spacious lobbies, elevators, higher ceiling heights and better views. Top quality projects also have a stronger resale value.

3. Demand And Supply

 This is one of the fundamental things to learn and understand for any savvy investor before investing in a property. Every city has a different set of micro-markets which enjoy a sufficient buoyancy. They have a stock (which includes the amount of residential and office plots already completed and leased) and an upcoming supply.

 There are several research companies that publish annual demand at different micro markets from time to time. The key is to gauge this interplay of demand and supply and invest accordingly. Keeping this in purview, a 2 BHK flat in Ghodbunder Road Thane is an ideal investment.

4. Lease Structure

 Commercial lease structures work a little differently from residential ones. There is usually a lock-in period of three years during which the tenant cannot vacate the property. The lease periods are structured as 9-years or 15-years with escalations every three and five years respectively. While analysing an investment, the investor has to understand how the lease is structured and what are the inherent risks involved.

5. Diversification

 We all have heard at different instances that diversification reduces risk, and this is especially true in real estate investing. If you invest all your savings in one property, you become vulnerable to a higher risk. Because, in case the tenant decides to vacate the property, your rent earnings will stop while expenses such as maintenance payments, property taxes, etc. will have to be paid. Investing in multiple properties, including the best property in Thane, reduces dependence on one source of rent income and variances in income by diversifying property level risk.