All you need to know before buying property

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There is almost a native intelligence amongst most people about the fact that an asset class  like real estate needs to be owned and bought and perhaps prospered with much like gold but its looks like some of the basics stepping stones are not very well understood.

In an exclusive interview with CNBC-TV18, Ramesh Jogani of Indiareit Fund Advisors and Pranay Vakil of Knight Frank (India) speak about just that and more.

Here is a slice of that interview. Watch accompanying video for complete interview.

Q: Straight off then with what real estate would be defined as? How would you go about defining real estate as an asset?

Vakil: It's an asset which is very different from any other asset because of the kind of investment that it requires, the kind of exit that it calls for and the long term nature of investment that it is. It means it's not like something you get in and get out very fast but it's something which you have to hold on to for at least about three to five years at the minimum.

Q: Would you go with that definition or would you want to flesh it out?

Jogani: It's a long term asset class. Your hold strategy has to be long term but if you stay put, you see huge returns and it will require native intelligence. You do not need to be an analyst or a chartered accountant; all you need to have is a deep desire to make money and this is the best way to go about. You can start off as a broker and then you can land up as an investor and finally a developer and that's what you see in most of the developers in the country have started off with. So it's an investment class where you can make big money if you are in it if you have the native wisdom of what to buy, when to buy and when to exit.

Q: Before we get to the internals of this asset itself, while people understand and appreciate the importance of owning property per se, some concepts for example a REIT fund are not that well understood. How would you go about finding that leg of real estate and owning it?

Jogani: Though you need a native wisdom to go about real estate but at the same time you need to be aligned to your investments. If you want a professional fund manager to manage your investment is best. You invest in structures like funds and REIT's, though REIT's are not opened up in India.

In a fund professional money manager like me accumulated money from institutions and HNI and REIT and then invest across different asset class. It could be commercial, residential, hospitality, retail.