Home buyer's first lesson

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By Sonal Sachdev: The first and most important decision to make before you buy a home is whether you are a home buyer or an investor. Simple as this may sound, it has significant implications on how you approach the purchase and how you view consequent developments. A couple of instances below will illustrate this and bring out the implications of this important first step.

Most builders play the build-as-you-go game with value-enhancing propositions built into the development calendar to help them manage rates (read increase) as work progresses. For instance the development of recreational facilities and amenities—like club houses—that usually get delayed beyond the completion of the first few residential blocks. So, buyers move in but have to wait for the amenities to become available. And when they do, the newer blocks have wrested the premium valuation, as most buyers will prefer to move into a newly built apartment. If your intention was to invest, you would have invested in the new block at a very early stage. A secondary sale will never fetch you as much if a builder still has stock to sell. You may still make good gains, but not as much as you could have. Whereas, if you had to buy a house and couldn’t wait so long and you have no intention to sell, buying a house in the first phase was possibly a wise decision. You bought at a good rate, the amenities eventually kicked-in, and you saved on rent. And it isn’t that your investment hasn’t appreciated.

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