How one can figure out the true cost of a real estate investment?

Its a common mistake to think that the money needed to buy a property is the true cost of investment. A true cost of investment can be calculated after adding the cost of buying a property with legal and registration costs alongwith the cost of repairs, property tax and scheduled maintenance costs. It is always better to stay updated with the various duties prevailing in the area to calculate the true cost of investment beforehand. We list down some cost and expenses that you should keep in mind while calculating your true real estate investment

Mortgage: Unless one is paying 100% cash, one will have to a take a loan on the property which means he will be paying an interest on the loan taken. Property in most of the urban areas such as Mumbai, Delhi, Gurgaon, Bangalore is quiet expensive and generally the working class has to take a loan to buy a property here, as a result a buyer is forced to pay an additional interest which has to be taken into consideration while calculating true investment cost.

Property taxes: Property taxes vary according to the region where a property is located. In Delhi property taxes may be different than in Mumbai. So know about property tax rates before you invest in a city.

Capital Gains: If one is selling a property within three years of the investment it will be subject to short term capital gain tax.

Property Management fees: If a person choose to hire a real estate agent to buy or sell a property, he will have to pay charges for the broker services. Usually realty agents charge about .5 % to 1% from both the parties as fees, when a transaction is completed.

Legal fees: Fees associated stamp duty, transfer duty and registration costs. These costs also vary from city to city.

Repairs: One may have to incur a significant cost for repairing and renovation of the property, this might increase the total property cost and might significantly change the overall real estate investment.