Real Estate vs Share Market for next 10 years

[Being.smart]

I know many will bait that real estate will give you returns much more higher than any other investment,

But i think the price of the property has already reached the sky level and might stay there for a long time or will fall.

Just for ex: just checked out one 4-bhk 4000 sqft villa in my locality (10 yr old property), its retailing for approx 1.8 crore, when i researched how much rent i can expect from it, it was ranging between 12-16k .

I though it would be a stupid investment for me.

I might be wrong in my saying, share your views on it, might help other members too

 

[Vagabond]

If you want to "Invest" that much of amount its simply not advisable to invest in property alone.

Go diversified - Stocks , Mutual funds, SIP in equity, Gold, FDs (in descending order of risks involved), % investment in each depends on your risk taking capabilities.

Considering your age, its good point of start for you, and in long term it will surely beat the other investments.

 

[Lord Nemesis]

Just for ex: just checked out one 4-bhk 4000 sqft villa in my locality (10 yr old property), its retailing for approx 1.8 crore, when i researched how much rent i can expect from it, it was ranging between 12-16k .

16k rent for a 4000sq.ft viila seems way too low. In Hyderabad (which is one of the cheapest cities), you can expect a rent of 20~25k for a 1700~2000 sq.ft 3BHK flat in any of the affordable townships. Most of these flats were purchased for ~50Lac or so just a few years back.

In the more premium towships/apartments, the maintenance itself would run above 20k.

 

[rdst_1]

I know many will bait that real estate will give you returns much more higher than any other investment,

But i think the price of the property has already reached the sky level and might stay there for a long time or will fall.

Just for ex: just checked out one 4-bhk 4000 sqft villa in my locality (10 yr old property), its retailing for approx 1.8 crore, when i researched how much rent i can expect from it, it was ranging between 12-16k .

I though it would be a stupid investment for me.

I might be wrong in my saying, share your views on it, might help other members too

Yes, you are right in your assumptions. From whatever I have seen, it really doesn't make any sense to invest in real estate for commoners like us. The only money to be made in real estate is buying land cheap when you know that a township/highway etc. is going to be approved and that usually requires having inside information.
The real state of all the real estate investors is pretty bad. However they refuse to let the bubble burst because they have considerable black money and can ride the tide for considerably longer. The right time to invest in real estate will definitely come. Till then look to other avenues for investment.

 

[eternoMind]

Indian real estate market is one of very low annual rental yields. Even in the aforementioned case of 20-25K rental on a 50 Lac property, the annual yield is around 5 to 6% post maintenance costs. That is still good as generally, yields are in the range of 3-4 % only. 5-6 % is lower than most debt instruments.

Days of rapid appreciation in prices of built up property are gone. So the argument of capital appreciation is more suited to land plots, and buying those is not everyone's cup of tea.

Above reasons make RE very unattractive from investment point of view. Not to speak of hassles in maintaining the property you buy, paperwork involved with tenants, and most importantly getting a good tenant.

 

[whatsinaname]

Indian real estate market is one of very low annual rental yields. Even in the aforementioned case of 20-25K rental on a 50 Lac property, the annual yield is around 5 to 6% post maintenance costs. That is still good as generally, yields are in the range of 3-4 % only. 5-6 % is lower than most debt instruments.

Days of rapid appreciation in prices of built up property are gone. So the argument of capital appreciation is more suited to land plots, and buying those is not everyone's cup of tea.

Above reasons make RE very unattractive from investment point of view. Not to speak of hassles in maintaining the property you buy, paperwork involved with tenants, and most importantly getting a good tenant.

And considering that most people need to take a loan to buy such a property, the ROI is even lower. If you take a 30lac loan and repay over 10 years, that's an additional 18lacs of interest paid.

 

[koolcoolkg]

You can build a small apartment scheme of 3 floors 6 flats and sell it.

A bit risky but if you have that villa in nice locality with all basic necessities in place like good drainage system,light and water supply your scheme will work.

I know Investment will reach around 3 cr but you can approach banks.

Just remember that a person(buyer) should feel like it is his dream home.

I mean Total Quality Management.No compromises.

That matters a lot.

 

[sharktale1212]

^ This reminded me of a discussion I had with an ex-colleague of mine. He bought a house in Bangalore and was offered a "partnership". The seller/builder was a manager in Patni Computers. What the manager did was that he partnered with 3-4 guys, bought a piece of land and sold flats in places near companies. These properties though in a "not so good" locality ie not good drainage, water logging in rainy season, bad roads were sold at comparative low rates ~20-25 lakhs for 1BHK. With people ready to pay up up to 13-15k monthly rent to stay near a company, the ROI was still good.

 

[koolcoolkg]

^ This reminded me of a discussion I had with an ex-colleague of mine. He bought a house in Bangalore and was offered a "partnership". The seller/builder was a manager in Patni Computers. What the manager did was that he partnered with 3-4 guys, bought a piece of land and sold flats in places near companies. These properties though in a "not so good" locality ie not good drainage, water logging in rainy season, bad roads were sold at comparative low rates ~20-25 lakhs for 1BHK. With people ready to pay up up to 13-15k monthly rent to stay near a company, the ROI was still good.

Yep there are builders who do this.
But generally illiterate and have some money power or backing.

But there are some builders who just believe in building the 3rd basic necessity(shelter) with full devotion.
Today they are a brand.