Examine the reason for striking a deal

The rebates under the Income Tax Act for those availing housing loans have attracted several people to consider buying property. But, is that enough reason to invest in property? For S. Ranganathan, a Bangalore-based real estate consultant, it is not.

"Though one of the best reasons to buy a house today is, 'I am paying too much income tax', it really is not the only one. My answer to that would be, are there not other ways to circumvent paying income tax, especially if you are not exactly in the best financial position to buy a house?" asks Ranganathan.

Agreeing with him, N. Seshadri, another consultant who has been dealing mainly with residential properties, says, "A housing loan is a long term one and an income tax problem is a short term one. It really makes little sense to find a long-term solution for a short term problem!"

What then, should be your perfect excuse to buy a house? "There can be many reasons to buy or not to buy a house," points out Ranganathan, explaining, "If the market has bottomed out, if you want stability and if you are pretty sure that you are going to continue working and living in that particular city, it makes sense to look at the possibility of investing in property."

However, he says that just because you think you have money lying around and not earning much, it really is not a good idea to put it all in property.

"Real estate returns are much slower and lower. Property does not appreciate quickly and the market can be quite fickle," he warns, adding that some times, you might be better off putting the money in a bank!

People tend to look at property as a life time investment, but pay very little attention to whether at that point of time, their reason for buying it is really viable, says Seshadri.

Some might invest in a place just because a friend has and has told them that that particular area is going cheap just now, but will soon become an important residential/commercial hub in the future.

"I would tell them to watch their step because there is no saying what area might acquire what form in the future. A ring road might be planned just where your property is and you will be none the wiser for it," he says.

Yet another reason that often surfaces is that it is coming cheap. Apart from the monkeys and peanuts metaphor, one really has to look at not just the price but whether it makes for value for money, points out Seshadri.

A good question to ask, he continues, is why is it coming so cheap. You just might discover something nasty about it.

Most people tend to believe 'trends' sold to them by realtors, says Ranganathan. "People tell you that the market has bottomed out or that the market is on the upswing and the time to buy is now. But, I would say that the status of the market notwithstanding, the time to buy is when you are ready for it, not just because the market is down or going up," he says.

Seshadri quite agrees. "Reasons for buying property can be really interesting. There was some one I knew who wanted to buy a piece of land because it had a large mango tree and he'd always wanted one. This despite that everything else was against him.

To such a buyer, I would say, take some time and reflect on your decision. Find out why you really want to go ahead with a deal, examine it from all angles and then take the plunge." The mango tree can always be planted.

Kanchan Kaur is a Bangalore-based journalist specialising in property and real estate.