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Is it Advisable to Invest a Property In India Vs Property In US?

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Is it Advisable to Invest a Property In India Vs Property In US?

Last updated: May 25 2013
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  • Is it Advisable to Invest a Property In India Vs Property In US?

    Experts,

    I thought this is an interesting thought.

    Say for an NRI who wants to work in US for next 20 years is it wise to move at least one property worth around 1.5crores to US and invest in commercial property.


    Benefits:

    1)Returns are more in US say for 15 years investment timeframe considering very low interest rates.

    2)Diminishing or less returns if the indian property is in almost developed areas(like places where apts are going for 10,000 per square feet)

    3) Positive cash flow that will help better lifestyle.

    case in Point:
    ----------------

    Assume an apartment(2 year old) worth 1.25 crores today in an area with 10,000 sq feet.
    Returns expected in 10-15 years is say it might sell for 20,000 then values goes to 2.5crores

    But in the new scenario the person moves money to US say he has around 220 K and he puts 30K more and buys a commercial property for $600,000K his load for 350K(15 years) will be around 2k and tax and maintenanace around 1K even if the rent is around 5K then 2k cash flow every month. so if 15 years he will get 375K + his property worth 250K + 350K + even assuming 1% appreciation avg he can make another say $100k

    In India 1.25cr becomes 2.5crores
    In US 250K becomes 650K + 360k( based on cash flow of 2K per month for 15 years)

    Any thoughts guys. Also am I missing anything.

    People like Rajagopal who have lived in US can add some more valid points.
  • #2

    #2

    Re : Is it Advisable to Invest a Property In India Vs Property In US?

    Are you saying Indian property will only double in 10-15 years?

    I find estimating returns of Indian property is very hard.
    Well, most city properties doubled in two years from 2010/11-2012/13. I myself have experienced in buying developed high rate areas and the rate going even higher.


    Also are you also implying US property will increase down the road?

    Well, we all know what happened.


    You are comparing leverage and buy/hold.
    US property is leveraged while Indian Apt is non-leveraged.
    Last edited May 24 2013, 09:57 PM.

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    • #3

      #3

      Re : Is it Advisable to Invest a Property In India Vs Property In US?

      I am talking about apartments say a 9000 per sqft apartment in place like Velachery how much upward potential it will have after 10-12 years.

      A resale apartment in Andheri west(around 15 years old are available for 15,000 and in places like Greater Kailesh today 15 years old resale sells for around 18,000)
      Last edited May 24 2013, 10:00 PM.

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      • #4

        #4

        Re : Is it Advisable to Invest a Property In India Vs Property In US?

        Originally posted by k11 View Post

        Also are you also implying US property will increase down the road?

        Well, we all know what happened.


        You are comparing leverage and buy/hold.
        US property is leveraged while Indian Apt is non-leveraged.
        Yes using indian apartment value(say i am selling it) I can leverage a US property at current interest rates around 3.2% it is very attractive.

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        • #5

          #5

          Re : Is it Advisable to Invest a Property In India Vs Property In US?

          Did you ever think about leveraging in India itself.

          Try to sell the apt and book multiple apts under staggered payment
          or buying plots in far away places.


          Leveraging wins over buy/hold anytime when things are going well.
          No questions, where-ever it is.
          Last edited May 25 2013, 12:06 AM.

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          • #6

            #6

            Re : Is it Advisable to Invest a Property In India Vs Property In US?

            Say for an NRI who wants to work in US for next 20 years is it wise to move at least one property worth around 1.5crores to US and invest in commercial property.

            Hi - Simple answer to this , leaving ecnomics behind is - Its best to invest where you plan to reside in future . All investments are geared towrds securing money , sothat you can live peaceful life during retiremnt .



            My friend who become a citizen in US is having tough time to sell properties he bought in india and bringing teh money to US , so that he can buy better home here .

            Also it goes other way around its toughtto sell a house worth 600k $, and transfer all of them to buy a property in india

            So it all depends on where you have decided to continue your life .. so since u have said 20 yrs in US and moving to india after that ..its better to create assets in india and manage tjem there itself

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            • #7

              #7

              Re : Is it Advisable to Invest a Property In India Vs Property In US?

              Most people do not move back to India.
              I think very few people after staying 20+ years might move to India soon.

              It is a good idea to look into property at your resident country (US, UK, etc.).

              There might be some good opportunities there itself and you might feel comfortable having property nearby than having 9,000 miles away.

              I myself have bought property from NRI (non Indian citizens) who migrated to western country long time ago. Many do not have anyone in India and it is big hassle to rent/maintain them. So they keep it locked mostly. Some people do not even visit India regularly, so I do not see a point in holding RE in India.

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              • #8

                #8

                Re : Is it Advisable to Invest a Property In India Vs Property In US?

                Well it is better for US Nri to hold 30 or 40 % in US I am trying to analyze based on returns.
                US real estate investments are not bad considering leverage,interest rates and rental yields.

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                • #9

                  #9

                  Re : Is it Advisable to Invest a Property In India Vs Property In US?

                  US is becoming very protectionist. They want to ensure people who are coming into the country contribute to the local economy and not act like parasites. The immigration bill thats tabled is aimed to tap into the savings of the Hispanics and other illegal immigrants. The relaxation proposed to allow spouse of H1B workers to accompany and work is to ensure people dont work in US and send money back home. We can expect more and more such restrictions to cut the flow of money outside US including taxation/fees. If Obama succeeds it will kick start the US economy and put it back on track. But it will create a challenge to all NRI's who have heavy investments in India and paying loan by remitting. If you ask me, for a person who is going to live in US for 20 years he should buy in US preferrably one residential and one farmland/commercial property..get a citizenship and get settled there. If the person is like a ABCD(American Born Confused Desi) with conflicted patriotism and attachment towards both India and American Culture.The person has to very carefully analyze their priority, discuss with family, explore employment opportunities and decide where they want to spend their life and grow their children and decide quickly within the next 2 years.
                  Last edited May 25 2013, 03:33 AM.

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                  • #10

                    #10

                    Re : Is it Advisable to Invest a Property In India Vs Property In US?

                    K11 - Ias rightly said 20 yrs no one will go back to indi .Incase if they go they will come back within 6 months being unable to cope up . thats the reality ..
                    nabhiskek --R u talking abt the ABCD kids ..they may not be old wnugh to invest in RE .

                    The fact is simple - if you have spent more years in US , invest there and keep your life happy there .

                    Short term ( say less than 6 yrs ) - staying their for work purpose only and planning to lead life in india ..invest in india ..

                    small example - i was impressed with scenic beatuy in kerala near kuttralam (place called aryangavu surronded by rainforest ) asked my friend whether i can buy a land there ( for summer recreation home like that ) , he said its not safe to buy land in kerala when u r current residence is in chennai .anytime u might see some communist flag there stating its their land .

                    So the point there is no protection for property if u r not staying closer to it

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