Real estate investors vs end-users – which one gains more benefit from the property investment? This has always remained a topic of debate among the realty experts in the market. However, many people still fail to understand the fine line of difference between the two. For instance, while the location is very important when buying a home for the end-user, one could probably compromise on it a little when it comes to real estate investment.

Investing vs End-Use: What is the main difference?

Real estate investment is categorized into two parts – investment and end-use. The investment goals of an end user are very different from a property investor; therefore, deciding factors will also vary in both the cases. A person who buys a property to reside in it is called an end-user. Investors, on the other hand, purchase the property with an aim to generate rental income or for better returns on investment at later stages. 

Important Factors To Consider While Choosing Between Real Estate Investing and End-Use

1. Location

End-User: For those who are planning to own a home in order to shift into it, location plays the most important role. Make sure that the area you choose is highly accessible and convenient. Moreover, it should cater to all your needs. Besides this, the location should also offer all the necessary facilities such as schools, hospitals and malls and should be well-connected to other parts of the city as well.

One must consider the neighbourhood in the area and ensure whether it suits your lifestyle or not. Even if you are opting for a suburban pocket, where you do not plan to shift immediately, think about factors such as political stability of the region, infrastructural plans proposed by the municipal body and the major residential projects in that area. This will help you determine the livability index of the locality.

Investors: For those who want to dip their toes in the real estate market solely for investment purposes, a thorough research of the location is very important. Many realty experts believe that the newly emerging localities in your city can help you earn a good amount of ROI on your property. 

Such developing locations might not have all social and physical facilities in place but they will offer a lower entry price, resulting in a better scope of price appreciation. However, you must take the time span you wish to stay in the market into consideration as it will help you choose an ideal location to invest in.

For instance, if you have around 10 years, it makes sense to invest in a locality that is at an early stage of development. On the contrary, if your time span varies from 3 to 5 years, then it is advisable to opt for a location which has witnessed some development and price appreciation in the last few years. 

• Construction Status

End-users: Construction stage of a property you are planning to buy is one of the significant factors to consider as it determines your monthly outflow in the form of EMIs, in case you are planning to avail a home loan. For instance, if you are living on rent, it will make more sense to invest in a ready-to-move-in property or one that is nearing possession. Otherwise, you will have to handle the double burden of EMIs and rent. 

Investors: If you are looking for quick returns on your investment, it is safe to enter the pre-launch or launch stage of a property. You pay less but entail a higher risk as there is no guarantee of on-time delivery. You can exit when the property is mid-way through construction and invest the capital thus gained in another property. 

However, you would reap maximum benefit if you exit at the time of possession, given the condition that you are willing to wait that long. If you cannot wait for a longer period of time, you can consider investing when the property is partially ready. In this case, the initial capital would be higher, but you would be able to lease out the property within a year or so and earn rental income. 

• Infrastructure

End-users: While buying a property for end-use, make sure the location boasts well-developed infrastructure. A good road network, renowned schools, hospitals and recreational zones in the vicinity and proximity to airport and railway stations can make your life easy. 

Investors: A lot of suburban localities and peripheral areas in India don’t have the best of the social and physical infrastructure in place. But one must check whether the area is included in the main city’s master plan or not. Furthermore, a prospective investor should determine whether the state/central government has announced some projects that could lift the area’s location attractiveness index. 

• Type of Property

End-users: No one but you know which property type including plot, house, villa or apartment – would address your family requirements. Therefore, make a buying decision that suits your family needs.

Investors: If you wish to earn big returns, invest in a property type that is in demand. For this, you can interact with as many property consultants as you can and also do some extensive research online. A good way is to follow real estate communities and forums and then decipher the demand.