1 - NEVER buy a flat for EARNING RENTAL INCOME | Bad Home Loan | Naredco Homethon Property Expo 2023
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- Опубліковано 27 чер 2023
- ISSUED IN PUBLIC INTEREST BY
KRISHNARAJ RAO
9821588114 and 8169471229
krish.kkphoto@gmail.com
Twitter @BravePedestrian
Mumbai
#realestate #rentalproperty #propertyinvestment #property #flat #regularincome #Naredco #Homethon #PropertyExpo2023 #rentals #HomethonExpo2023
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Real Estate in India is very profitable if you are a goonda backed by a lawyer. For others it is best to work hard and leave the country for greener pastures where the police is professional and justice is not delayed forever.
Agreed
Bro police can be corrupt in developed countries as well
@@BING9957
Off course, but its exception not the norm.
Corrupt officers do get dismissed + jail in developed nations. In Vishaguru they are just transferred.
@@fanaticcoder3320In vishwaguru there is lack of media and plenty of Andhbhakts who thinks prime minister is avatar
This is called poor illiterare democracy..caste creed religion decides vote vank.....i hope one day people of india become Good gentle professional type people@@abhishekkumar-bt6tu
Amusing how Krishnaraj Sir took the best case scenario (which is never so) and yet concluded it is not worth it. Now imagine the taking the worst case scenario. I would rather be a homeless beggar than go through that hell.
I agree partially, if you buy society flat or builder floor then don't rent out , buy for self stay . However if you are buying plot and doing construction yourself , then rent out floorwise to seperate tenants on each floor because here you can exercise greater control over the property. You need a constant caretaker of property and need to ensure timely renewal of lease and need to get new tenants well before the old tenant leaves . See in that case , rental yield increases over time , after 15 to 20 years , your property will (or should) become free from EMI and the overall rental yield will increase 2.5 times or 3 times of what you were getting initially when you first started renting the premises . So real solid income starts after property is EMI free and all this while there is capital appreciation. If you actually calculate capital appreciation rate plus tax saving plus rental yield in 15 to 20 years , your overall property income and value will reach your initial overall investment in the very least .
That's a false assumption.
That's why most folks fall for it. We have our own property where we stay in ground floor and 1st floor is given for rent.
In initial years, rent increases annually. But after few years rent stagnates as property also gets old. Now if you want to increase rent, then you have to redo the interiors and repaint it after every couple of years. Trust me there are lot of factors that people don't consider.
That’s a different case he is talking about apartment only no plot.
Real estate has taught me that if you don’t take risk…
You’re paying rent to someone who did…
Thanks
Apart from getting mental satisfaction of being a house owner, buying flat on emi is really risky. 1 thing Krishnaraj sir did not touch is municipal taxes n society charges - they are reccuring and very high. One has to pay emi n also bear burden of taxes, etc!
As sir pointed out, apart only from "land", all other asset's are depreciating-
One must consider with all care and attention, the pros n cons of buying house.
Forever ever-increasing rent paying is no solution either. Rather one should pay limited time EMI and own a house / flat / apartment where he lives.
Even land is depreciating.
@@sandeshbhandare7238how??
I had same thoughts. But ppl usually buy apartments because 'some' friend did so and wife thinks you should do it too.
If you analyse people’s problems closely, usually the wife has a hand in it.
But sir 50lacs after 18years may be worth of 12lacs , should not we need to increase fd amount such that it beats inflation?
2 of my friends who bought flats for investment in Bombay / Delhi are struggling to sell off. They bought in 2014/2015. They can’t even sell at same price because no buyers. Plus tenant issues. Lol. One of them is in London. His tenant stopped rent in 2020 due to job loss at the beginning of Covid. Unimaginably stressful situation.
Whr is the flat let me know i will sell
I would like to know more on the property in question. Do let me know if we can connect.
If it is 2000 instead of 2014 , your friend would have been in different eltie zone
.. they missed cycle by 10/12 years .... Also location matters
@@macdeep8523how to spot the cycle
one sided argument
1) Not considering capital appreciation of property
2) Rental income also increases
3) In intrest income, fd amount remains fixed and doesn't appreciate over time. Only the intrerest received
Your analysis is flawed
Kitne paise latak Gaye 😂
I don't agree with him he has not taken in to account 1st the initial rent would be less as compared to price but as the time passes the rental will increase, the value of house will increase 2nd for example I bought in 1984 2 BHK @ 145000 today it's 175 lacs, initial rent 5000 now rent 30000 3rd I bought in 1992 @ 235000 initial rent 1500 now 18000 and sale value 45-50 lacs 4th I bought Shop in 2002 @ 16 lacs initial rent 7000 now 50-60000 market value 175 lacs. So inshort capital appreciation and rent appreciation is not taken in to account. Yes if you want to buy outside Mumbai then the best investment is land in cities like Nashik, Aurangabad, Nagpur, Pune, Sangli, Satara etc.
Ya He missed on Rental Appreciation and Property Value Appreciation on Long Term Basis.
Sahi bande ho aap, smart ho
Hence pressing the dislike button. What a waste video
He did not go into details and complexities and he mentioned that. He just gave an overview of the situation with pros and cons, Such detailed analysis will require an excel sheet. By the way, that is also available on UA-cam if you look around.
Completely bogus analysis ! The appreciation value of property has not been considered. The rental is purely for maintenance of the flat. The property appreciation is the real gain. Further, he takes extraordinary situations of suicide, drugs etc to prove his point, which is an extreme situation.
Flats have depreciation and old flats are very hard to sell, other than in a city like Mumbai
Also no discussion of leverage when buying a flat via home loan
I was expecting you to back your statement with numbers. Flats, if they ever appreciate, it's often less than keeping same money in savings account at 4%.
@@KAlpha09 u have no idea!
My father bought a 1RK 200 sqft in MHADA in 1980 at Rs. 14k, now he earns 15k rent per month after 43 years, but building is going for redevelopment soon.
However we must not forget the purchasing power of money in respective time period.
House property rental yeild is just 1% for initial 10years (deduction of taxes, maintenance society, upkeep etc) is my experience from 2013, where as interest amount levied is just double the amount of loan in 20year tenure.
So after 2043, will I get 1Cr rent per month for my flat which was costed me 1Cr in 2013? Absolutely not.
Sir 50 lacs at 5% yields only 2,50,000 so technically 20k per month।. Secondly there is appreciation of value, check prices of property in delhi Mumbai 18 years ago.
Yes with due respect to sir, i really appreciate his knowledge and experience that's why I watched his videos but sir missed price hike in rent which would increased by 7- 8 % per annum so that initial 50k rent would have gone to 1lacs in 9 years and upto 2 lacs rent per month in 18 years.
Bacho ki tarah baatien kr k jo mann m aayi without logic one sided , he proved his point
2000 ( 15 lakh flat in Wadala ) now cost 1.25 cr ... Max .. but that boom cycle has gone now
. 1.15 cr flat will not become 5 cr in next 18 years ...
This is the most absurd advisor i have come acorss. Total non-Sense he speaks. The rentals double every 5 to 6 years whereas the EMI does not double. It reduces. As the person who bought the house is well off his income will also increase. He will foreclsoe the loan in 7 to 8 years. and then he will earn the rental income. plus property appreciation
@@macdeep8523 At 9% inflation 15L flat will be 1.08 Cr in 23 years. So even with boom cycle there is very little real appreciation. You are right that the boom cycle is gone so no point purchasing now for rental income. Thanks for the data points.
Only people who should do this are people who have net worth above 5-7 Cr
One thing you missed sir, Rent (50000) will increase by around 10% every year.
This is so informative sir. I’m currently in rental and wanted to buy an apartment for my parents and seeing all these non-biased videos have made me clear on my decision
Just like stocks are two types growth stocks and income stocks properties are also two types. For growth properties you need reliable contacts who can give insider information on 10 year development in the area. Bigshots have this info and they accumulate huge wealth buying multiple properties like this. Imcome properties are in already developed areas where the rentals are high but it is very difficult to find a good resale in these areas.
You have pointed out the worst case scenario and missed the most obvious positive point - in 18 years a flat you buy for 1 crore would have appreciated to 4 crore in Mumbai. This is a too one-sided assessment.
Exactly ... He forgot to take into account, the appreciation of the flat itself ...
People who are good at it - are making good cash flow with rental yields. But you have to be that sort of person who is a hustler with good political contacts in the area and live close by. For straightforward people living far away and no contacts in the area - it is a nightmare.
You are spot on, the local people in power has much in control for these things if you are not native or living far away
Exactly my thoughts
Krish ji, you are always clear on your views and thoughts. Sometimes you give extreme examples related to property which may look harsh and rare examples but it is reality of life. I like the way you end your sessions, Jai Hind, Jai Maharashtra 🎉
A real eye opener video
Krish sir you are simpy awesome
Please keep keep posting such videos
If we talk about Bengaluru, then it is completely wrong analysis (highly negative side).
1. You can easily get 2-BHK in 1 Cr in WhiteField-Sarjapur area (excluding Brigade, Shobha, Prestige like prime builders), still you can still get decent 2-BHK with all good amenities.
2. Rental Income is at least 30k-45k for 2-BHK in these areas. Brigade, Shobha, Prestige 2-BHK rents are always 50k plus.
3. On 5th Year you can easily sell this 2-BHK for 1.5 Cr.
4. If you do not want to sell. Possibly price of flat will not in increase much, but rental will always.
Very good points. Thanks,
There is also the point of liquidity.
Very right. Due to this misunderstanding housing has reached hyperinflationary levels. There are better and safe investment opportunities but it require expertise to counter negative returns of FDs after considering tax and inflation. Indexation benefit is mandatory and must be made applicable to FDs to counter inflation with lower tax rate. Why should people who invest in fixed income instruments suffer from negative returns due to high taxation and inflation. One should buy a house only for self occupation and not as investment. It is a basic necessity as it provides shelter. Govt should cap house prices. The prices have crossed affordability index. Every tom dick and harry wants to be a builder these days and the houses constructed does no have cross ventilation and one who resides in them has to depend on air conditioners and pay heavy electricity bills and spoil environment. It is really painful to see all this happening. It is not development in its true sense. It is a middle class trap.
Exactly bro. I commented the same thing in comment box
जिन्होंने किराए पर मकान दे रखें हैं क्या वास्तव में इस तरह की समस्याएँ नियमित रूप से झेल रहें हैं? कुछ मामलो में ऐसा हो सकता है ?
क्या आप दुर्घटना के भय से घर से बाहर निकलना छोड़ चुके हैं?
Hello sir please answer me question, you didn't take parameters in account
- rental appreciation every year
- property appreciation every year
- reducing rate of interest
I don't know your intention but you so real i have never seen such person in this space
The rent of the house is 50,000 per month for first year.
The rent will also increse every 11 months.
Considering this, the rent will increase a lot after 18 years.
Considering 8% per year increase in rent it will become 4 times in 18 years.
He is telling the facts as per current market status. Please don’t consider old cases where people bought flat 20-30 yr back. The current real estate market is at its peak but for investor its better to invest the amount in stocks/mutual funds etc which is headache free.
Good analysis. Thanks.
Not at the point. Rent & Salary of the person would increase. There are Income tax rebates each year.
If area is improved, rates of property increases.
Right sir 100% 👍👍. Peoples dont have or poor investment knowledge.
Capital appreciation argument is nonsense. Real Estate is the most illiquid asset. And trying to sell an old apartment with uncertain redevelopment plan is total nuts.
🙏आदरणीय आप जी ने बहुत ही सहज तरीके से विषय को समझाने का प्रयास किया है उसके लिए 🌹साधुवाद🌹 lआपने अनेक बैंकों में अपने पैसे को रखने के लिए सलाह दी है ,परंतु हकीकत यह है कि बैंकिंग भी आज आम आदमी के लिए सरदर्द बन चुकी है, नहीं क्या⁉️🙏
हकीकत यह है कि एक वर्ग विशेष बैंकों से नफरत करने लग गया है और करनी भी चाहिए अपने ही पैसे के लिए यह जो केवाईसी और भागदौड़ करवाते हैं वह आदमी को हैरान और☹️ परेशान करके रख देती है 🤔⁉️🙏
Best guardian for those people who are investing money in property
Sir a very simple calculation is that ke wo 50 lakhs after fully repayment itself becomes 1 crore that means that flat cost him 1.50 crores
Best investment is gold ,
Sir, can you please make a video on how to invest in commercial property? Pros and Cons.. thanks
I fully agree sir thanks for the right true information thanks 🙏🙏
capital appreciation ?
Some of the flaws in the evaluation. Rent cannot stayed same for next 18 years.
Of course it's averaged out for simplification.
Vert true and nice information
Sir... Ekdam sahi bole.... Only 1.8 % max returns vs FD 7 %... So roughly 300 % more yield in FD than in rental... Aur ek danger reason.... Prostitutuon.😮
This reasoning & argument do not have any basis , it’s kind of pick & choose , very conveniently turning blind to other side of coin. For example the price of ur apartment would be close to double in 18 years while the value of your money will depreciate with time. Again rents are always appreciating with a avg of 8 to 10 % every year. Lastly never buy high value apartment with a motive of earning rental income.
So taking your own words where do you see "low value apartment" for rental income purpose
Flat in a big city, reputed builder, with good construction quality will appreciate. My own flat in mumbai 500 sq ft was bought in 1970 for rs 8000. It is on the verge of re development and earning a monthly rent of 25000 . Also another flat belonging to my uncle bought in 1960s after re development earns a rent of Rs 70000/- serving as retirement income. Is this kind of appreciation possible for F. D. You cannot generalize that flats are not good investment. Location, infrastructure is the game changer.
Boss, can you come out of your past and talk in terms of current rates
@@fortalk6032He’s right , boss. In Bangalore , if you buy an apartment from a grade A builder in a decent location with good public transport connectivity, you will easily get tenants willing to pay a high rent and the property will appreciate year after year as well . Especially in Bangalore , there are so many projects coming up , the real estate market will continue to boom for the next 5 years atleast ..
Sir, I am sure the rent is higher after 2005. can you let me know what the rent was at 1980, 1990, 2000, 2010, 2020. Also, in 1970 how did you earn 8000 assuming you were between 10 to 20 years old. How many years did you wait to get huge rental income. If house is from previous generation, then it is better not to discuss more. 1970 and 2023 is 53 years difference.
Absolutely True
You answered your own question, If in 1970, you bought a flat at 8000, and are earning 25k rent now. Do you think 50 years from now, someone who buys a flat at 80 lakhs today, will receive 2.5 crores monthly rent in 2074 based on your personal appreciation value?
The reason for the incredible appreciation of current land value is simple - there was plenty of land after independence with mainly agriculture and industrial growth in that era. Today, with globalization, digitalization, and technological influence, international markets have diverged together to massively appreciate the land value for people that invested in those times. There has been a surge in employment rates from those times to now, people have moved to taking up apartments instead of living in joint families, more women employment in the current era compared to then. All of this contribute directly to demand for housing and expansion of industries. Hence, the price surge in land value.
Now we have an economic stagnation in most cities save for Mumbai. But even in Mumbai, you'll never see the land appreciate like it did from 1960s to present rates.
I also don't agree on many things with the video since he takes a lot of extreme situations and provides little to no evidence on risk. However, the whole justification that land value appreciates like it did in the early 60s without understanding markets or economic fluctuations is quite silly.
What about appreciation of rents over the years?
The problems due to the tenant's behavior or actions are 100% real. I live in Varanasi and here property rates are decent. A doctor (BHU) had possession of three good flats in an apartment. One of the flats recently met with a suicide case. Now, no one is renting that flat and his other flats being adjacent to this one, are doomed as well. So he is at a complete loss.
Couple of points I have leant over the years.
1. Makaan se pehle Dukaan khareedo. Commercial property will always give more yield.
2. Buy land and then do construction yourself. This will give more flexibility. Also, over the year the structure will depriciate but it will be compensated by the appriciation in land cost.
4. If your land is close to the highway or important market place, It will always appriciate. In case of land acquisition, you will get 6x land cost from govt. :)
3. Buy flat for rental income only if you have lots of black money that you want to put. Also, rental income can be taken in black. But yes, dealing in hard cash give a lot of mental pessure. All the time you will be worried about threats.
Sir it depends on flat to flat..
Wese rates in delhi have jncreased in only in long term
bakwaas, rent or makan ka price 18 saal baad kitna badh hata hai jara check kar lo apne Ghar ka
Please calculate CAGR return. You will get answer. He is absolutely right.
Check unko nhi aapko krne ki jrurt hai 😅
You have touched all possible extereme negative points. may be add... earthquake as well
Thanks u sir aap Hai to hum. AAM AADMI saved hai
The soothing sound of rain behind is amazing with all the wisdom shared in this video.
Rent has to be considered as incremental ordered as rent will be not same dor 18 years
So you are saying to buy a house or flat just for me & my family to stay in it but don't give it for rent......is that it???
Why do you want to recover from house in the first place?
yes rental yield is only 2 - 3 % in most areas. More than 5000 units of apartments are empty and not selling yet you are told this is a great investment.
Good advise ! aside the urban nexal melodrama, I am too old to be a Marxist leftie 😅had read marx in my 20s and thought was a joke . You are doing really good job making people aware about the shortcomings of flat ownership .👌👌
Thanks sir
You are assuming rent will remain the same for 18 years?
Income tax exemption benefit is a carrot🥕 shown by government to run banks, economy at the expense of flat buyers. And who benefits from realestate business, it's ultimately politicians.
You're absolutely right. Tension rehta hai landlord ko.
@krishnaraj rao, Sir, I want to talk to you. Need ur guidance and help on a RERA matter
100% agree
If I hv 1cr rupees then I will buy this flat with cash. If I get 25k evry month,I will invest this money into a mutual fund. Rental yeild every year increase by 5% .after 20 year almost will get 2.5cr from mutual fund.evry year I will increase my sip amount by 5%.also after 18 years my property value will double that time .
That 1 Cr in mutual fund with 15-20% return for 20 years …..
Purchase flat and give for rent like room wise with semi furnish ...
remember one thing real estate will always be on rise (10%)will be difficult for people soon to purchase.
Also remember to think about infra of that area and future needs.
Krishnaji....rental apartment is a very good retirement plan, especially in B-tier, suburban India. Both property owner (*if not greedy) and long-term punctual tenants benefit from it. But rental laws are bad in many indian cities.
Rental income is good in pockets , time of your purchase and demand in locality based on migration from surrounding villages
But the EMI will remain at 50,000 while the rent will increase by 4-10% every year in an already developed area and even more in an upcoming area.
So we have to calculate using that.
Also due to low urbanization and increasing population in India along with high population density, rent and property prices rise faster than inflation in most cases.
Agreed 100% just went through this night mare my tenant did a scam and ran away and all his creditors sealed shop it was a horrible time
Goa mein Rental kaisa hai?
Sir what is reality of Chandak greenairy boriwali east please guide
But sir 18 saal baad.. vo 1 crore ke flat ki value kitniiiii badh chuki hogii.. vo bi toh consider kroo
All the points mentioned by Krish sir are correct . In big cities, you will get a new launch in every 2-6 months duration with new amenities. So tenants also prefer to stay in new societies rather than staying in a flat that is more than 10+ yr old. And its one of the toughest task to sale a old flat even in posch areas considering new lauch available at the same rate.
Aap socho Jo ghar 18 saal pahle 1 crore me kharida tha. Wo 18 saal ke baad 10 crore ka bhi to hogaya hoga
What if the construction is of poor quality??. I have seen flats where leakages start within 10 yrs even before the tenure of EMI is over .
Sir, after 18 years rental will not be only 50k only
Very useful video sir. My dad made mistake of purchasing flat in under construction building thinking he will rent it out for getting some extra income. Now forget renting out the builder has abounded the construction midway and only god knows when flat will be ready. Big mess!
jo rate bar gaya 18 saal me flat ka uska kya
After watching this video saved
Property dekh janch kar khareedo koyi nuksan nahi hota,
mera brother in law ne flat liya hai abhi 58 lacs ka 2023 Jul me , bechne wale ne 24 lacs ka khareeda tha 2004
ab tak rent kamaya us flat se ...
maine khud dekha hai , price kaise badhte hai rent kamaya jata hai ..
kisi ki baton me mat aao , apni akal lagao
apne paise ko soch samajhkar lagao
Sir I am completely disagree we you, I have been a banker since last 10 year and jin logo ne 10-15 year phele loan liya tha aaj unki EMI unke electricity bill ke barabar hai and rent is increasing day by day. Secondly rental income may be tax free , FD ka interest is likely equal to or lesser than inflation. FD bhi yearly maturity karani padti hai otherwise bank Wale Kam interest rate pe renew kar dete hai . Or apki Asset ko loan se kharidi hai vho increase hoti rahti hai. Or Aaj kal mivan construction hai to flats ki age bhi bahut hai.
Income tax rebate for home loan and many more...
Super 100% correct sir
Sar you are doing a noble job of helping people avoid mistakes
Landlord is actually tenant of bank for 20 years.
Fd income is stagnant. It is worst way to grow your money. Capital appreciation and rental appreciation not considered. But sone of the analysis is spot on but others are bullshit. It all depends on how it is planned. Some ppl are earning handsomely others are making losses
Investment ka shikar bane Hai bahuf log Im saved
One sided analysis. One should diversify between real estate, equity and FD. If you want to pick one, real estate is good.
Considering the job market which is not stable buying house of 1.5cr is not easy with emi or loan.
Capital gain which can be off set in real estate is massive
Sir@5% FD...2.5 laks divide by 12 months then it's rs 20,833 not 25K
How come the rate of interest for FD per month is 5%? It is yearly 7%. Whole calculation is wrong.
sir,
thanks, please do video on what must be done instead of what must not be done!
Ok, so I should not make a video saying, "Don't jump into a well", at a time when everybody and his uncle thinks it is a good idea to jump into a well. I should make a video saying, instead, "Climb up a hill". Correct?
very close
Home is not a investment.Its a libility
No doubt flats are cheaper than buying a plot and construct your home in the same locality. But if one can sacrifice the locality, always buy a plot because land prices will always shoot up because land is a limited asset. Though you are buying a plot to stay and not as investment but it always a good feeling to see your the rates of your house is getting increased. On the other hand flats value always going to depreciate in long term.
All points can be valid but still if you check around you, people who are wealthy, earned by investing in real estate. Lol you need to check if you are eligible or not. It needs certain skills for it.
Middle Class, Working Class Do Not have this much Wisdom, Secondly there is a Blind Sheep Race to Buy Property, All Calculations are Thrown away Aside, This is the Fundamental Problem of People, Than they Suffer also for this.
How to calculate intrinsic value of a rental property(not market value)
(Average Annual Rent minus Service charges Annualy) multiplied by 10
Example:-
1BHK apartment
Average annual rent: 35,000
Service charges: 10,000
Intrinsic value of the property: (35,000-10,000)×10=2.5lacs
Market value may be 7.5lacs, 3 times the intrinsic value of the property
Note: It's average annual rent of that area for a similar property, not peak annual rent. Also you need to adjust the property price if it's an older property. Apartment prices usually follow Bell Shaped graph in Prices to Duration curve, where as Villas, Townhouses usually follow a positive linear line which is closer to x-axis line in the graph, but depends on the initial purchase price of the property
Where'd you get the figure of 10 years? Even red brick buildings usually have 50-60 years life. The multiplier of intrinsic value should ideally be 50 or at least 40, so take an avg of 45. Also, service charges to landlord are not that high (as %age of rentals). A 2 BHK in Mumbai in a decent locality can cost 70k a month or 840000 annually. 40 k may be the annual charge (prop tax, repairs excl. society maintenance that's given by the tenant directly), so annual income 8 lakhs. The intrinsic value thus comes out to 8 lakhs X 45 = Rs. 3.6 Cr. From a buyer's POV, this instrinsic value may be compared with market value and person's affordability and decision to buy may be taken even if market value is close to or higher than intrinsic as tax breaks on home buying loans are there and ownership of asset enables appreciation benefits renting does not.
No size fits all, considering inflation, tax benefit and low roi, home loan makes sense.
Rent will increase at 8-10% rate. You have not considered that. FD interest rate is yearly 8% and you have considered monthly 5%. Completely wrong calculation.
महंगाई और टैक्स का गणना ही नहीं हुआ है।