Lesson 9: Property – A must for investors

As of this writing India is populated with 1533701675 individuals. Though India is quite a big country, the surging population will render the real estate costs on the higher side year after year. One often hears that a plot (site) purchased a few years back for say 65000 is now selling at 2.5 Lakhs and so on. In most cases property appreciation is in the order of 40-100%. That is enormous considering the fact that the very risky stock markets also cannot give such returns on a regular basis. The risk involved is very less as a carefully chosen property will rarely give negative returns. They can give additional income like rentals. They are a good hedge against inflation as rarely you will find a property costing less than what it was. Pride is attached with ownership of a property (especially in India).

Then why not everyone drop the idea of investing elsewhere and go for property alone. The chief blocking point is that investments in property are way too costly. You cannot go and invest a few thousands in it. Unless you have a few lakhs of disposable cash, you cannot think of investing in property. (Of course with the advent of real estate funds, this could be solved).  Also you have to be extra careful as there are many bogus operators and you could be easily cheated and the money involved is quite high as well. The liquidity part is also alarming as to dispose a house and book the profit, it might take anywhere between a few months to a year.

Having said all this, there are other advantages that outshine. You can opt for a home loan where-by you can avail of tax benefits (Principal in the 1 Lakh limit and the interest part of upto 1.5 Lakhs  can be exempt from tax). If a home is purchased for self-residential purpose then you have your own house to live in (no more rents) and the joy of which only people living in rental houses can realize. You can decorate it as you like, nail anywhere any number of times, and most important of them all, you need not change you address with a dozen people (banks, electricity board, telephone etc) as you will not be changing you house any more.

But if you insist on the property being only for an investment, then buy plots (sites) rather than houses as the appreciation in plots (sites) are far better than built houses. Of course there are exceptions here too, as for example in Bangalore there is not much difference between any type of real estate investments (sites, apartments, individual houses) as there are crazy beggers here who will happily buy an apartment (for resale) for Rs 38 Lakhs, which is located on block E in the 16th floor of some ‘Stupid Nests’ built by KirukuPaya Developers Pvt. Ltd.

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