Archive | February, 2013

Is real estate a good investment?

3 Feb

Real estate is a sentimental liablity(often misunderstood as an asset). It is a great feel to own it but not for investment.

Today I was shown a property(11 years old second hand flat) @ some prime location in chennai, It is good and rate is not good.

Flat will not have building value beyond 25 years(i.e 14-15 more useful life).

Offer price to me was 70 lakh, I have UDS of  425 square feet.

Assuming rent would fetch 15k per month from the property with 5% raise year after year and real estate would appreciate 10% year on year I did the following math using excel(realestate)

All I get is only 6.75% per annum compounded returns.

Real estate is highly illiquid and highly unregulated sector.