Hi Guys,
Many people, including myself, think of investing in a second home. The perspective is to invest in real estate for growth of savings. Its certainly easy to buy a flat in an apartment, as opposed to invest in a plot, mostly because of the legal issues. I want to open up a discussion on:
What could be a good investment for a maturity period of 7 years?
A plot(not-in-layout) or a flat in an apartmentt? Think of legalities involved when buying either of them, and also the future prospect. For example, a plot can be used to build a commercial complex or multi-storey residential building, when the plot becomes a prime property. But there are many legalities involved when buying a plot - eg green belt, approvals, clear titles, etc.
What area of Bangalore is the best?
What must be the optimum sqft rate, to have a good yield/ROI? Example, is it easier for Rs. 300/sqft property to appreciate to Rs. 600/sqft, as opposed to a Rs. 2000/sqft property?
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  • Point 1: An appartment has the benefit of rentals and cash flow. however, the appreciation is slower than land. (Land appreciates, building depreciates)

    Point 2: the ideal holding period for an appartment would be 5-8 yrs. after which the building would be percieved as "old" and the rates will be much lower than the newer constructions around.

    Point 3: Land (if proper legal documentation/check etc is done properly) is always a better investment. Land keeps on appreciating. however, you will not get any income/cash flow till your build something or sell the land.

    Point 4: Land can be converted into different usage (eg. agri - residetial.. or rediential to commercial.. etc.) thus adding value to the same piece of land.

    Since your time frame is 7 yrs, I would recommend an appartment within the Ring road.. as there is no scope for new land to pop up.. away from the city, there are always new layouts coming up and newer areas getting converted and hence there is always higher supply as compared to the demand. Make it a point to stick to reputed builders or if budget permits then an independent house(ideally with smaller building and build higher floors --- construction cost is always lower than salable constructed area)

    best of luck and happy investing..