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.


2 Responses to “Is real estate a good investment?”

  1. thiru February 3, 2013 at 5:20 pm #

    And some pointers to good investment as well pls, if you haven’t done that already ! 🙂

  2. Siva February 4, 2013 at 2:29 am #

    It depends on the location vs the rent receivable

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: