Investing in office property can be a massive deal. Real property funding requires a notable deal of interest to calculate its benefit as well as the loss side. With the positive sentiments in real estate, the industrial area is witnessing a considerable high in demand. t not only assures a better rate of returns as compared to residential properties, but the commercial property value also experiences greater appreciation as compared to residential ones. But while buying a commercial property, the following elements must be considered.

Dishonest Schemes

The commercial property market is, now, flooded with numerous lucrative offers that include assured returns to investors. Sometimes enticed with such schemes customers use to purchase for such business spaces. At times, a few Builder fails to complete their commitments and investors end up with much less income as assured.  Secondly making an investment in office property and some other likewise projects at initial stage involves a higher amount of risk because the project may get delayed due to delay in approvals or so.

The Risk

The quantity of danger is inversely proportional to the development of the project i.e. the quantity of danger is maximum on the initiation of project and begins diminishing as the project progresses. So, the risk factor is maximum when the project is under construction; minimal when the project is completed and no risk when it is rented out. Hence, making an investment in under-construction residential property involves huge risk while real estate investment in the case for office property in particular involves diminished risk. But at the same time, a building with a tenant on lease is not 100% risk-free as the tenant may vacate the property and you may be able to find soon another tenant. In such cases, the property will remain vacant and you will lose upon the amount of premium paid for that property over an under-construction one for that period.

Due Diligence

Any project that has a big scope of proposed infrastructure has a big ability of price appreciation as well. While selecting a commercial project with a view to investment, one must assure the project quality that must have well-connected roads and highways. If you’re making an investment in an under-construction project, you should make sure that the supply by the completion of the project is not greater than its demand as such circumstances will yield returns much lower than expected.

Location

Location plays an important role in the quantum of appreciation of a property. The office spaces that are near or quite accessible from the commercial hubs are likely to yield more returns and is expected to appreciate better in terms of pricing as compared to others. The upcoming commercial hubs like Noida and Gurgaon wherein maximum of the MNCs look for office spaces, to expand their operations have more rental value as compared to the adjoining areas Faridabad and Sahibabad. MNCs generally look forward to leasing a commercial property instead of buying it hence the investor has a huge scope of earning substantial rental income by investing in office spaces in upcoming commercial hubs.

Transportation Accessibility

Another key factor determining the appreciation of an office space in near future is the transportation facility associated with the location of the project.  Obviously, such locations have more worth than the remote locations and MNCs also prefer to hire such office spaces for the sake of convenience of employees. Employees have to travel every day to office, projects with good transportation accessibility plays a vital role in employee retention and thus this factor ranks high on the considerations while renting an office space.

Neighboring Infrastructure

With major developments in neighborhood infrastructure, the price of a commercial property is likely to appreciate in multiples. With better infrastructure, the commercial properties are able to draw attention from emerging MNCs that are looking to expand their operations and opting for renting office spaces.  Like the commercial spaces in Noida and Gurgaon come with the infrastructural developments like Metro and multiple flyover projects which has surged the prices as well as demand for the office property in these areas.

However, each prime commercial space with a prime location comes with a prime price. So, each investment avenue shall be compared on the basis of the amount invested as well as the expected return out of it. With the boost in commercial activities and higher prices of the commercial segment, this sector is surely experiencing a huge potential of investment yielding rental income.

InvITs or Infrastructure Investment Trusts is an organization that permits funding into infrastructure making sure earnings in stocks to folks that invested in either small quantities or a big quantity for the ones infrastructural projects. The profit given away to the unitholders is after deducting the expenditures from the profit earned. It is gaining recognition amongst traders like mutual finances funding.

SPV or Special Purpose Vehicle is some other manner from a direct investment that InvITs can spend money on infrastructure. Unlike different projects, for Public-Private Partnership, investment is executed through SPV only.

The body that regulates InvITs in India is Securities and Exchange Board of India. SEBI additionally said that InvITs is one of the most popular ways of investing in infrastructure in the country allowing an individual or companies to earn more in the long run.

Types

 InvITs are available in two types: one is for the ones complicated and high-end infrastructure projects and the second is for easy project which are under construction.

Let us understand the structure 

InvITs is a body that is governed by SEBI or Securities and Exchange Board of India. There are four parties in the Trust.

Trustee

It is that party that looks after the overall functioning of InvITs and it cannot be associated with any other party of the Trust. In this case, SEBI is the trustee.

Sponsor 

The name itself indicates the frame or organization that shows interest in the promotion of the trust. It can be an LLP or Limited Liability Partnership organization that has a net worth of Rs 100 crore and applies to the SEBI or it could be SVP in case of projects under PPP or Public-Private Partnership. It is necessary for the sponsors to have as a minimum 25% of the investment for not less than three years.

Investment Manager

 The person that has the duty of executing important things like assets and investments are referred to as investment managers.

Project Manager

 The person or a company responsible for executing the functioning of InvITs by following the policies laid down is known as a project manager.

Apart from the four parties that are important parts of InvITs, the infrastructure investment institute should be listed on the stock exchange. Without being listed, it will be deemed null and void.

Investment Policies that should be adhered to by InvITs

It depends on how much assets is going to be invested by InvITs. The rules and regulations for more than 80% investment and for more than 10% investment differ in a huge manner.

If the InvITs is planning to invest 80% of the value, then it has to abide by the following checkpoints:

• It cannot raise funds through any other means but through public issued units
• The public float should be at least 25% and the number of investors should not be less than 20
• The subscription size should be at least Rs 10 lakh while the trading lot should be Rs 5 lakh
• The cash flow that is distributable should be distributed in amount not less than 90%
• The valuation of the assets invested should be done yearly together with the regular update bi-yearly
• The part remaining that is 20% can be invested in other permissible investment like under construction projects. One point to keep in mind is that such investments can’t exceed 10% of the asset value

If the InvITs is planning to invest 10% of the asset value in the projects under construction, then it has to abide by the following checkpoints:

• Unlike the 80% investment, InvITs can raise funds from qualified and dignified institutional buyers or bodies and it is done through private placement
• The minimum investment can’t be less than Rs 1 crore. The same goes for trading lot
• There should be at least five investors not as big as the investment of 80% where one needs to have at least 20 investors
• The distribution of distributable cash flow is the same which is 90%
• The assets need to be valued on a yearly basis without a default

It should be noted that all public and private InvITs need to be listed.

Advantages of InvITs 

It is one of the high-dividends yielding investments that may be exquisite in case you are thinking about the safety of finance. It guarantees a stable flow of cash for a longer duration compared to other investments. The earnings from the dividend is exempted from tax. What can one investor ask for?

It is a great way to relax the burden on banking institutions making funds available for investors into infrastructural projects.  Pooling of cash from numerous investors makes way for more profit as all come together for a common cause. The profit earned is shared depending on the investment done.

Although there are blessings that could trap anyone, like mutual funds, InvITs do have shortfalls. When the stock exchange dips, InvITs additionally display a dip in returns. Investors’ investments depend upon the functioning of the stock exchange without any span of control by those investors. Nevertheless, InvITs is making news for its more positives than negatives.

Properties in joint names have several benefits over the properties in single names and to attract such benefits one need to be aware of those. Generally, each potential client will a diligent studies on type of property she or he desires to buy, right from its pricing to the formalities and documents required for purchasing it. But, lots of us aren’t even aware of the benefits of buying property in joint names and what property’s joint holders will receive.

Income Tax Benefits                               

This is very crucial in terms of income tax benefits. Such benefits could only be enjoyed by the holder of the property. For example, if you have bought a property in the name of your wife and both of you sharing the EMIs payment, only your wife shall be able to claim income-tax rebate out of the EMIs amount paid.

 Joint Ownership Benefit

 So far, there’s no particular regulation that governs who can be added as a joint owner for a property to be in joint names. It may be anybody from near family like partner, youngsters, parents, brother or sister on your pals or commercial enterprise partners. It is usually recommended to buy a property in joint names over single name. In case you’re a bachelor, you should purchase it together along with your and your parent’s call as a property joint holder. In case you’re married, you could choose your partner or children as a joint owner. The property’s joint proprietors aren’t required to make a contribution in the direction of the price of the property.

Claiming Benefit         

In case of any unexpected mishap to either of the owners of the property, the property receives robotically transferred to the closing joint holders. As flats in housing societies are in huge demand under residential houses segment, the societies generally transfer the flat in the name of remaining joint holders without insisting on a no-objection certificate from other legal heirs to the remaining joint holder of the property; in case of death of any property holder which is jointly owned.

In case of home loans as well, the creditors additionally insist for co-debtors like close relatives, spouses, kids or parents so that during case of death of any of the applicants, the legal responsibility might be constant at the relaxation of co-debtors, In fact most of the of the lenders do not entertain the loan application in single name.

Loan Benefit

This advantage may be drawn without problems for joint properties. With the whooping charges of property, huge loan is required to undertake to acquire it and rebates can only be claimed for income tax purposes by the owner of the property only. The repayment of principal amount derives tax benefits under Section 80C and the interest amount gets the rebate under Section 24b. For example, if you take a loan of 50 lakhs for a residential property, the annual interest with the interest rate 9.50% shall be calculated as 4.75 lakhs.

The income tax act has levied a cap of Rs. 2 Lakhs per person that can be claimed for a rebate on account of interest for every financial year. In such a case, you shall be able to claim a maximum of up to Rs. 2L while if the property is joint-holding, then each holder can claim an amount of Rs. 2L on account of interest. Similarly, the repayment of the principal amount can be claimed up to 1.5 lakh each per annum under Section 80C.

So, in case you buy a property in joint names, each of the holders can claim 1.5 lakhs with the presumption which you don’t have any other expenditure or investment qualified under the aforesaid section.