How Lucrative is Real Estate Investment

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Phone - 080 40155666, 8494 9301 72 Email -
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How Lucrative is Real Estate Investment
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Phone - 080 40155666, 8494 9301 72 Email -
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Real Estate Investment

• Real estate falls under one of the major
  investment hubs that one looks for. At the same
  time a house, apartment or a property is a place
  to live in and is a life time investment of
  oneself with ones life time savings as well.
• To sell the house that one lives in is often the
  last option that one has in search of liquidity. 
  In this stance let us evaluate real estate as an
  option of investment.

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Phone - 080 40155666, 8494 9301 72 Email -
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•  The house one lives is considered to be cash
  flow negative which means that instead of
  generating income and liquidity it requires money
  to maintain it.
• If you talk about rent generating capacity it is
  actually half the amount of EMI that the house or
  a property generates. One may argue that the
  capital appreciation and the value is also there.
  
• In case of land or any other assets like gold
  that is not there. You cant income keeping the
  asset to generate or increase in value at the
  same time.

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Phone - 080 40155666, 8494 9301 72 Email -
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• In case of properties bought on loan the catching
  up of the earnings over costs happen only when
  the loan amount is closed and the entire loan is
  repaid.
• If you take an investment in a flat or an
  apartment from an income perspective this is
  perhaps what the situation turns out to be.
• Let us suppose that you buy a 1000 sq. ft. of an
  apartment in one of the Tier II cities which will
  be around Rs. 2, 500 per sq. ft. This will lead
  to the house costing about Rs. 25, 00, 000.

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• If you procure a loan of Rs. 20 lakhs which is 80
  percent of the amount and the loan tenure is for
  15 years the EMI that you have to pay is Rs.
  20,300.
• But on contrast to that the rental price in these
  cities may even cross a limit of Rs. 10, 000
  which is virtually lesser than half of the EMI.  
• If it is assumed that your rental income
  increases at a rate of 5 percent each year the
  rent will equal the EMI on the fourteenth year
  and the loan tenure is of 15 years.

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Phone - 080 40155666, 8494 9301 72 Email -
contact_at_gruhakalyan.com

• Another aspect that needs to be considered while
  calculating the income generating potential of a
  property is that any property has maintenance and
  especially the apartments which also grows year
  on year.
• Thus considering all these it can be said that a
  fully paid property can only be an income
  generating asset and before that it is a
  liability.One thing that needs to be kept in mind
  is that the property does appreciate in value and
  that can only be used or encashed when the
  property is sold.
• In common parlance the selling of the property is
  generally the last option that one has which one
  may have to do for liquidity.  But this is also
  true that capital appreciation is also a point of
  advantage and becomes a favourable factor when
  one obtains a loan on mortgage of a property.
   From this perspective capital appreciation is
  one of the positive factors that houses and
  apartments offer.

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Phone - 080 40155666, 8494 9301 72 Email -
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• This is also not true that the value of the
  properties only appreciates and they never
  depreciate. On the contrary the economic turmoil
  of the current times is because of the drop of
  the real estate prices on a global scale more
  than expectation.
• Real estate does appreciate in prices but capital
  appreciation is of value when the property is
  sold.  The value can also be tapped by the
  mortgage of the property.
• The house that we use for dwelling purpose is not
  able to generate income and it has a negative
  cash flow.Rent is a stable income but in most
  cases it is not the same as the EMI and much
  lesser but it is profitable only when the loan is
  closed or repaid.

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Phone - 080 40155666, 8494 9301 72 Email -
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•  But this is also true that capital appreciation
  is also a point of advantage and becomes a
  favourable factor when one obtains a loan on
  mortgage of a property.  From this perspective
  capital appreciation is one of the positive
  factors that houses and apartments offer.
• The next comes the mid income segment of housing
  which is again driven by the IT and the ITeS
  sector employees.
• But the west on the other hand has not been so
  successful in attracting high end realty
  apartments or villas mainly due to the
  infrastructure bottlenecks. This area is mainly
  the industrial hub of the town with of course
  many residential areas popping up in the last
  decade or so.

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Phone - 080 40155666, 8494 9301 72 Email -
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Property Buying Tips

• Pre-launch Flats Vs. Ready-to-move Apartments
• Now is the right time to buy a house or property
  in Bangalore 
• How to buy a flat being Cautious to avoid
  Problems
• Increase of Smaller Homes in Indian Realty Market

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