Is real estate investment a waste in India?

To give a simple answer to this question, I would say that it depends on what type of real estate investment and where the investment is done. Many people share different perspectives on this topic and sometimes it even becomes a debatable and conflict generating topic.

APR matters and ROI matters

Mostly let's say someone is having 1 crore in their hand and would like to purchase a property and rent it out. There is a high chance that they might rent it out for a 3% APR. In India, most people purchase property like these only with the support of loans and they pay at least a minimum of 8 to 9 percent as interest for the loan taken. The only hope here is the appreciation of the property value. There are a few drawbacks here.

Source

1. The value of the property goes at least 20% down as soon as we buy it. The reason is because it is considered a second-hand property after we purchase and the value is at least 20% less than our bought price.
2. Even if we leave for rental the maximum APR that we would be getting is 3% but we have to pay 9% to the bank as interest before we completely own the property where 6% goes to waste.
3. Someone who has a full 1 Crore in hand and trying to purchase a property is also losing here because if they had done some alternative investment, they could easily get 9% from their investment. But if they purchase a property and rent it out, they get only a 3% maximum as their return on investment.

Some of the mandatory situations for real estate investments

Everyone doesn't need to be doing investments in real estate. The following things can be considered and the following scenarios can be a good one if someone wants to invest in real estate:

1. If you have a lot of cash flow every month and the other investment avenues are already done and if you want to diversify.
2. You have got the best deal in one of the hottest places
3. You are paying a high rental currently and the EMI you would be paying for the new flat would be a similar one.
4. You have so much of money ready in hand and you want to try real estate without worrying about profit or loss.
5. The return on investment from your real estate gives you more than any savings interest.
6. When you see a rapid price increase potential on a property based on area or circumstances.

Source

I can keep going on and on by adding a few more points but the point is that the experts say that real estate investments are only for people who would like to diversify their investments and those who have already done other types of investments. But many people don't have any hard feelings attached to a property and they simply focus on buying and selling for profit. Those people make use of the opportunity very well and sometimes with their experience they even know when to enter and when to exit.

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