I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.
See all posts Frank GogolAll You Need to Know About Investment Property in India
Updated on April 9, 2024
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Buying property in India is certainly not easy – in fact, it is impossible, depending on who and where you are. You can buy property in India if you are in the US, but only if you have Indian citizenship and are in the US on a visa.
However, regardless of these difficulties, the Indian real estate market is growing by the minute and is attracting the attention of various investors. A simple estate can bring high returns and huge profits – which is why you need to keep yourself informed.
Major Benefits of Investing in Property
It might come with various difficulties – such as no complete transparency and high transaction costs – but it has certainly become an attractive option for investors. If you are in India and wish to invest in property, or if you are purchasing overseas on a visa, there are some benefits that you might want to know of.
1. Return on Investment in High
When it comes to investment, risks are something you can never actually get rid of. To get good returns, you need to take a risk – but when it comes to investment property in India, this risk is minimized when you have had the estate for a fairly long time.
However, this is a far more convenient choice compared to other markets. When it comes to the stock market, for example, the risk is relatively higher – and never really goes away.
2. Tangible Asset Value
The market is continuously increasing and decreasing, so other investments are left with no actual tangible value. You can never know what to expect from this type of investment.
However, the real estate market provides much more tangible values. Moreover, considering that most people investing in property also have homeowner insurance, their investment is also protected.
3. Passive Income Source
When you invest in property, you gain passive income simply by owning it. A common method would be to rent that property out but you can also get income by selling and buying or building equity on that property.
Investment property in India is a great way to get some passive income – one that has nothing to do with your main income. It might be difficult to do at first, and you might need to get a loan to buy the land, but the results should certainly be worth it – provided you invest it right.
How to Buy Property in India
As mentioned, buying property in India is not something that you can do unless you are an Indian citizen. It is not legal for a foreign national to hold property in India unless they complete a 183-day residency within a financial year.
Considering that a visa only lasts for 180 days, it is considered that the foreign national is a resident. Before your visa expires, you remain a non-resident.
Needless to say, if you are on a visa in India, it is not legal to buy property. It is also not possible for an Indian resident to jointly purchase with someone that is a non-resident.
That being said, a foreign national in India does not need RBI approval to obtain property in India. The reasoning behind this is fairly simple: once you become a resident in India, you have the same rights as someone who has been born and raised in India.
However, this citizenship has its limits. For example, citizens of Pakistan, Sri Lanka, Bangladesh, Afghanistan, Iran, China, Bhutan, and Nepal do not have this freedom.
Once you have met the requirements, you can buy as many properties as you want. When a prospective buyer has chosen the property, they will have to negotiate the price with the seller. Each purchase will be mediated by an attorney, which will draw up an Agreement of Sale.
Upon signing the document, the buyer will be required to pay 10% or 20% of the purchase price as a deposit. Once that is done with, the attorney will conduct due diligence and check the title for encumbrances.
Before the conveyance documents are signed, they must be stamped by the Stamp Duty Office. Once that is completed, the remaining balance is given to the seller – usually by means of a loan. The duties are paid at the Sub-Registrar of Assurance Government, and the estate officially becomes the buyer’s property.
The whole registering process can last up to 44 days – the procedures depending on who you are working with. The level of difficulty will also depend on your citizenship status.
Transaction Costs for Buying Land in India
When buying or selling property in India, you have to keep several transaction fees in mind. These round trip transaction fees can include anything from notary fees, attorney fees, taxes, registration fees, agent fees, and so on.
However, whenever dealing with the costs, you need to be familiar with certain factors at first. This way, it will be ensured that the process will go smoothly.
Currency
India uses Indian Rupee as their currency, so it is likely that you will not be able to purchase property in any other currency. However, the exchange rate from Dollars to Rupees has been the same since July 17, 2006 – and that is 1 USD = 56.43 INR. You can also use a currency calculator if you have more money to deal with.
Stamp Duty
Stamp duty may be paid on property transfers. The rates generally vary between 4% and 10% – but the determining factor is generally the location of the property.
For instance, if you buy property in Mumbai, the stamp duty will be at around 4%. However, if you decide that you wish to buy in Chennai, the stamp duty can be as high as 8%.
The more in demand a city is, the higher these fees will be. However, you may want to consider the investment in the long run. For instance, while you may pay a higher initial rate for the property, the return you will get because of the location might make the investment worth it.
Registration Fee
Generally speaking, the registration fees are around 1% of the value of the property. Therefore, the more expensive the property is, the more you will have to pay on this fee. The fees may depend on the location of the property, which is why you might want to do some research first.
Legal Fee
Last but not least, when it comes to the transaction costs of buying property in India, you might also want to keep legal fees in mind. Usually, these fees are around 1.5% of the value of the property – but they might also depend on the value of the property’s location.
The more central the property is, the higher the fee may be. However, hey will, however, generally stay under 2%.
How to Take a Loan with Stilt to Invest in Property in India
Generally speaking, when one wishes to buy property in India, they will have to apply for a loan. This can be done no matter if you are a citizen living in India or if you are overseas on a visa. As long as you still have your Indian citizenship, this may easily be done – provided you choose the right lender.
In this case, you may want to opt for Stilt in order to apply for a personal loan. The process, as you will find out, is very straightforward. If you are interested in investment property in India, you can go through the following steps with Stilt:
1. Apply for the Loan
The Stilt application process for a loan is very easy to go through, as long as you are eligible for a loan. You will have to fill in a form while bringing the paperwork necessary to prove your income.
Stilt will require that, along with the application form and your citizenship status, you will submit information on:
- The credit score or credit check
- Financial behavior
- Current employment
- Collections, defaults, or bankruptcies
- Education
Once you have submitted the required paperwork, you can advance towards the next step.
2. Get Approved
Once Stilt has approved that you are indeed eligible for a personal loan, they will accept your application. The approval process may take up to 24 hours – so by the next day, you should receive your feedback.
Once your application has been approved, Stilt will make you an offer based on your information. Once you have signed the promissory note, the money will reach your account in 2-3 business days.
3. Start With the Payments
Now that you have received the loan, all that’s left for you is to pay it back. This is done on a schedule, and you may also link your account to an autopay feature.
Personal Loans
for Non-U.S. Citizens!
Loans for up to $25,000. No cosigner required. No prepayment penalty.
Conclusion
Investment property in India might sound relatively intimidating – but if done right, it can also prove to be a convenient way to gain passive income. And all you will have to do is buy property! If that’s your aim, do it with a personal loan from Stilt.
Frank Gogol
I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.