Property Purchase for Rental Income - Query & Discussion

[kodiswaran]

I have an offer for a standalone building in 9 cent which has 10 flats priced at 2.5Cr, bringing the total cost to 2.8Cr after registration. The rental income is expected to be around 1 lakh per month. I have 1.5Cr in my bank account and plan to take a loan for the remaining 1.3Cr, with an EMI of approximately 1.2 lakh per month.

Details: Its present nearby Coimbatore. 1km from the main road between mettupalayam to coimbatore. Bus stop is present in 50meters. Bike parking is available. Car parking is not available.

Other Expenses:
- Common Electricity ( ~₹8000 / 2 month )
- Cleaning the common area ( ~ ₹1000 / month )
- Security Camara ( ~₹1000 / month )
- property tax and water tax ( ~₹25000 / year )

Income: 1 lakh per month (₹10k per flat)

I am investing in the stock market while also considering real estate, yet I am still unsure if it's a wise investment or if I should rethink it. Kindly share thoughts and insights.

 

[NABNAB is verified member.]

Don't know about the area and probable land price appreciation, but generally in residential property 2-3% rental yield is common. Which seems you are getting according to these numbers.

For common electricity, you can think of getting Solar Panels installed, will be a good investment considering long term plan.

Make yourself very well aware about what you are getting into, sometimes it becomes headache to deal with the tenants. (Not giving rent on time, not vacating the place, damages the property, etc.) Always go with the "Live and License" agreement instead of the traditional "Rent Agreement". Tenant can literally stay in your property without paying rent and you can't even ask them to vacate! (Yes, Legally!)
It's always better to have some political connections when entering into such businesses.

So, do some due-diligence at your part and if papers and everything else are clear, you can go ahead, no issues. (Consult a very good lawyer.)

 

[AlgoTrader]

Rate of land in that area is approx 10L per cent, so 90L is land cost, 1.6 Crore seems reasonable for 10 flat building,.
If I was in your position, I will go ahead.
PS: Should have skill to work with tenants