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Property investment is better option than stock market and gold

Published & Updated as on - 2010-02-16

Real Estate can be the best investment option for people sitting on the fence waiting for the market to bottom out .With builders wooing buyers with lucrative offers and interest rates already trimmed down realty is the smart investment decision for now.

While the real estate market and the stock market have many similarities, there are also several aspects in which they are as dissimilar as chalk and cheese. The key differentiator between the two is that equity shares are purchased with the singular aim of making a profit from their appreciation in value. On the other hand, flat buyers base their decision on two factors - the ambience of the project or the type of lifestyle it offers, and the scope for returns. The volatile Sensex is for those who look to get rich quick and often lose their hard earned money even faster. On the other hand, while the real estate market may have its share of ups and downs, the price variations are not as large, so the impact is comparatively minimal.

Moreover, there is a basic difference between real estate and the stock market - a home is a 'real', tangible asset that will always have a practical utility, regardless of its market value at any given point in time. Moreover, a decent home in a good project at a great location will always find takers, so purchasing a home is always a sensible decision in every way.

Similarly, while gold prices may be headed north on a sustained basis, the fact remains that for most Indians, the yellow metal has tremendous sentimental value. While buying it is an easy decision to take, selling gold ornaments or even using them as collateral for a loan can result in high drama and tears, with households playing out the equivalent of a daily television serial episode.

While there is a rising trend of people living in their own homes buying another one with the intention to lease it out, certain locations and apartment configurations are better suited for this purpose than others.

If you already have a home and want to create another with minimal investment, just follow this simple formula that Mumbaikars have adopted for almost a decade. Buy a ready-possession flat with a home loan and lease it out immediately. Between the home loan tax breaks and the lease rental income, your net outgo at the end of the day, would be barely half the amount that would otherwise have been required.

The obvious question that arises at this stage, is why do this now? With most people booking homes in upcoming projects with possession scheduled between year 2011 and 2013, the demand for rental accommodation has really shot up in recent months. So leasing out an apartment is a lot easier in the present scenario and that too, at higher rentals.

In addition to this, take into account the sustained expansion in BPO setups and television serials with their accompanying workforce and actors. Suddenly it's become a lot easier to lease out a flat even in the suburbs, with the owners calling the shots.

These days, flat owners are taking their time and choosing tenants with the sort of discerning parameters one would normally apply for selecting a potential spouse!

In fact, the demand for leased accommodation is so high, that people even ask the watchmen of new residential buildings to keep them informed about the availability of flats for this purpose. So go ahead and create a 'concrete asset' with minimal investment!

Source : DNA 26/12/2009

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