I joined this forum a while go and its a real great one to share ideas and see what all new is happening in the real estate market ..

Although, what shocks me is that where are people getting so much money to buy properties ?? I read newspapers etc and we hear about poverty , inflation , low paying jobs etc and in this forum people say they have booked flats ranging from 50 lacs into crores .


Please dont get this thread wrong , I am not against peoples progress I am just very curious to know how are people investing money running into lacs and booking properties as though they are buying some television set ..


Are there some new schemes , what am I missing ?? Would be great to know what people are doing to invest so much into properties .. If a person buys a first home that is understandable as one always needs one major fixed asset and that is your own home .. but here people seem to be booking their 2nd , 3 rd and even 4th homes and beyond . please enlighten me ... :)
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  • Sorry if you all find it little irrelevant. .

    But I love to add here that, it’s not only IT guys making big bucks, believe me, many more other avenues are available where you find having package from 16 to 22L and yes there are lesser known areas (Thanks god otherwise everyone one jump to those areas of expertise where rest of people are making money and saturation haven’t come so far ;-) ). you don’t know on the name of an IT job what ppl do and feel frustrated. In cut short money is everywhere if you are good in your domain and at right time and right place.

    Secondly I have seen couple making lot of money (me too one of them) but somewhere you have to cut a line so that you remember that you are still alive and human. one should schedule the rat race time, you can’t be a rat all the life and if one chooses to be then I must say you are compromising many other things so better be prepare and schedule as we are not on earth to act as money making machines.

    Now little relevant, even you are making big bucks, you are INSECURE. we all know bigger the position and pay, the more chances to be feeling insecure and stress level is natural. I don’t blame corporate, even, if I pay someone 1L +, I would try my level best to suck all his or her blood (normally) ;-)

    This is all financial management where you may find one is making more money than others but quality of life has not a great proportional factor. You must not try achieving other’s dreams and finally feel cheated that you never wanted that. It happens, setting a wrong goal and achieving the wrong targets.

    ITS NOT IMPORTANT HOW PEOPLE ARE BUYING, IMPORTANT IS HOW YOU AND ME CAN BUY AND HOW LONG AND HOW MUCH IS ENOUGH TO FEEL SATISFIED. FUNNY IS NO ONE KNOWS THAT, AND THAT’S CREATES AN ENDLESS RATE RACE.
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  • Originally Posted by rohu01
    1) People with lot of black money - businessmen, politicians, bureaucrats.
    2) Hardworking couples earning 30L+
    3) NRIs
    4) People upgrading by selling old house.

    Rightly said. And the point to note is that there is no 5th category; so you either belong to these 4 categories to be able to buy/own a property; or you are relegated to asking such questions in these forums (like gaurang, no offense buddy) or post reply to these questions (like yours truely aka WhySoSerious). (-:

    On a more serious note, once you understand who is buying at these rates, i.e. the fabulous four, you also realize why these prices have no link to "affordibility", ground realities and average income levels, why most indians who anyways does not belong to the the fabulous four are amazed at this classic bubble-like situation, why this can go on for a very long time (though not forever) and most importantly why it is not a prudent idea for an average first-time buyer to enter/buy/speculate at these rates even if he/she can actually afford it (sometimes discretion is the better part of valor).
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  • Originally Posted by dpkmjn2012
    Sorry if you all find it little irrelevant. .

    But I love to add here that, it’s not only IT guys making big bucks, believe me, many more other avenues are available where you find having package from 16 to 22L and yes there are lesser known areas (Thanks god otherwise everyone one jump to those areas of expertise where rest of people are making money and saturation haven’t come so far ;-) ). you don’t know on the name of an IT job what ppl do and feel frustrated. In cut short money is everywhere if you are good in your domain and at right time and right place.

    Secondly I have seen couple making lot of money (me too one of them) but somewhere you have to cut a line so that you remember that you are still alive and human. one should schedule the rat race time, you can’t be a rat all the life and if one chooses to be then I must say you are compromising many other things so better be prepare and schedule as we are not on earth to act as money making machines.

    Now little relevant, even you are making big bucks, you are INSECURE. we all know bigger the position and pay, the more chances to be feeling insecure and stress level is natural. I don’t blame corporate, even, if I pay someone 1L +, I would try my level best to suck all his or her blood (normally) ;-)

    This is all financial management where you may find one is making more money than others but quality of life has not a great proportional factor. You must not try achieving other’s dreams and finally feel cheated that you never wanted that. It happens, setting a wrong goal and achieving the wrong targets.

    ITS NOT IMPORTANT HOW PEOPLE ARE BUYING, IMPORTANT IS HOW YOU AND ME CAN BUY AND HOW LONG AND HOW MUCH IS ENOUGH TO FEEL SATISFIED. FUNNY IS NO ONE KNOWS THAT, AND THAT’S CREATES AN ENDLESS RATE RACE.


    Hi, I don't think there is a mention of 'only' IT guys earning big salaries. What is mentioned is that the several IT folks travel for 1-2 year assignments and come back with a lump sum amount and prefer to invest it in properties rather than other avenues.

    In fact in certain cases BFSI's and other sectors pay much more than IT co's, especially in the case of good Indian companies and large MNC's. Also I am sure every industry has its own set of frustrated people, since times have changed and lives have become more stressful and hectic.

    I do agree one has to set their priority straight and check what is more imp. at that point of time, and not live just to build houses and then not have the time to enjoy them. Nevertheless at the right age it is good to build a good platform for yourself and your family, so that you can have a happy life as you grow older and need that cushion.

    Different people have different situations and I think things vary on a case to case basis. What matters is whether you are happy/satisfied with where you are, what you are doing, etc.
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  • I have paid 40-60% for all the 4 and as I said with out leverage.

    Plus I have kept sufficient reserves that I can pay the balance amounts even in the worst of situations so i am not just taking a speculative bets. But all are calculated bets/decisions.

    There are hundereds and millions of people like me who are getting xtremely high salaries (much much better than me as well). Most of the NRIs prefer to put money in RE. Even my friends who work in india get 20-40 L packages with 5-7 years of experience. They can easily buy 1 if not 4 flats.

    But I wont deny the fact that prices are extremely high and exorbitant. I myself always advocate that prices should come so the gap reduces between self made people like me and the people who are born rich just by the virtue of having ancestral properties.

    Plus all I was trying to say was that there are many ways to earn big money - education/jobs/entrepreneurship. There was to be will to work hard plus with some luck and right opportunities. Everything is possible.

    I also advocate investing across asset classes. But there should always be around 60% exposure in Real Estate and rest in FD/Gold/Equity


    Originally Posted by ruchika1
    amit,
    no bad intent, but everybody's both parents r not in govrnmnt jobs and all indians dont live in middle east.
    less than 0.0001% indians will fall in ur category.
    when the person created this thread and asked this question probably he had an average indian in his mind, not the lucky , privileged or extra-ordinary few. n prices of properties shud b in line with an average salaried guy not extra ordinary few. tmrw mark zuckerberg might say tht i started in middle class family but i purchased 1 billion dollar property in 3 year. these r not common or normal or average examples. when we talk of a country or real estate prices they shud reflect an average indian's (who is living n earning in india) case.
    secondly, and more importantly u can say that u had put ur money in 4 diffrnt investment but cant say that u have "bought" or "purchased" 4 properties in 4 years bec u havent paid for all the flats. i dont knw but am quite certain u might not hav paid even 25% for each of them, which means tht u might not hav paid for even 1 appartment.
    the prices in india r exorbitant to say the least !!
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  • amit001,

    Ruchika's points is still valid that the original question was not about anyone's individual success story but a more generic one.

    The CEO of my firm owns multiple properties and I could have replied that if you will get top-notch degrees, marry accordingly and work hard and with some good luck you can become a CEO and then you can also buy multiple properties. But that reply would have been absurd, irrelevant and off-topic.
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  • Originally Posted by amit001
    I come from a middle class background. Both my parents were govt servants.

    PS - if you have fire and passion to achieve anything. Nothing is impossible. Offcourse with some luck and right opportunities.


    Well done amit001 --> Congrats Buddy!!
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  • Well, well looks everyone seems to think that buying multiple properties and that too ASAP say before they reach 30 yrs is a "sign of success", "have made it", " i have arrived" feeling...

    Firstly, waqt se pehle aur kismet se jyaada - no one can get more than he/she deserves...some1 who makes atrocious amts early in life will pay heavy price as he growss in yrs in terms of health, family life etc - no cos will pay more than what they can xtract (time, life) from you by factor of 10 - so if some makes 1L than cos will try to make atleast 10L from he/she - the factor goes up as u rise in ladder..

    Secondly, Life and world is cylical in nature - economies, mkts, businesses go up & down - nothing remains at peak all time not nothing remains in the bottom all the time..so expecting "same returns" all the time is foolish...if today gold or RE is booming tomorrow some thing else (say silver, commodities or equities) may give great returns...BTW great return > inflation, for me!!

    Thirdly, ppl look at the upside of every investment that make but refuse to see the possible downside...RE prices for "buy" and "sell" have atleast 20% diff - sell being on lower side for retail investor.

    Well, all those x houses ppl are buying are actually "greed" and not "need"...i hope ppl know the diff. Life is great lever...

    Tips to survive:-
    01. Don't over-leverage
    02. Don't concentrate on any ONE asset calss
    03. Not everything is calculated in-terms of %age returns
    04. Learn to differentiate between need & greed...
    05. Life is great lever - finally what u really deserve remains rest life re-claims!!

    GET LIFE People - spend time with family & friends, meet elders in family, do things that make u happy paint, sing etc etc

    No matter how successful or wealthy u are - no take aways allowed !!!

    Regards
    SS
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  • For me,

    My source of money is my Mother in-Law.

    My Salary - income -- May be not good for more investment.
    These father/forefather money is really important......for investment.

    For every person - own earned money is not too much (Except few examples)
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  • Not many people understand investments...

    I know an average guy.. graduate.. had 2 small 1 BHK apartments in Bandra in 2007 and when the building went for redevelopment he exited both at an huge price ..
    He bought 2 houses in Mumbai in JVLR for just within a crore for capital gains and invested 1 crore (50 lakhs each for 2 houses) in the capital saving bond..

    He had about 25 lakhs balance in his savings account which the relationship manager sold infrastructure , power theme funds and ulips.. which are today quite worthless.. or at a loss...

    when the capital gain bonds matured he has about a crore.. do you think he will invest again in equities.. Surely not.. He has invested in properties.. 2 under construction properties .. paid the full amount.. in some SRA project.. Yeah the project has hardly progressed, but he is sure that whenever it is completed he has already doubled his investments.. He cannot say the same about his mutual fund investments...

    Same is the case with the political class... it is easier to manage properties which are big ticket items.. rather than multiple small investments...

    If you are accepting a bribe of 10000 Rupees you would rather receive 10 - 1000 Rupees and slip it into your wallet... rather than 10 bundles of Rs 10 note..
    easier to manage.. :)
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  • A lot of thought process that goes behind "Who buys the flat?", "How to pay EMI?" starts with a Service class mindset.

    There is a Business Class mindset which has a different though process. One of my businessman friends who could have easily bought a property with full downpayment, bought it on a home loan (80% of value) at 10.50%. He told me that the real reason for taking the home loan was to use that money in business. He was getting the home loan at 10.5% but business loan is available at 14%+. So you get the drift!
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  • Originally Posted by amit001
    Even my friends who work in india get 20-40 L packages with 5-7 years of experience. They can easily buy 1 if not 4 flats.



    Is it true, what profile they have ? MBA from IIM??
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  • Originally Posted by hindustan
    Is it true, what profile they have ? MBA from IIM??


    sometimes am actually surprised at reading msgs which i get to read here. looks like people r totally allienated to the real india and realities of our country.
    get shocked to see tht 20-30 lakhs packages r normal in india. i think we need to do a reality check. as mentioned by someone who had written this, "hundreds" of people get this package. but we need to remind ourselves that in india we dont hav hundred or thousand people, but a BILLION and we all shud spare sum time and check average salaries of an average indian.
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  • Three reasons:
    1) Real estate is the only asset class which can soak investment beyond a crore.
    2) Tax incentives and rent provide approximately 4% risk free return. So you end up paying only 6.5% interest on home loan. So as long as your property appreciates by 6.5%+ each year, you are not in the red!
    3) Real estate is the best hedge to inflation.
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  • Originally Posted by ngokhale
    Three reasons:
    1) Real estate is the only asset class which can soak investment beyond a crore.
    2) Tax incentives and rent provide approximately 4% risk free return. So you end up paying only 6.5% interest on home loan. So as long as your property appreciates by 6.5%+ each year, you are not in the red!
    3) Real estate is the best hedge to inflation.


    which out of these reasons was missing bfr 2004 ?
    what i feel is these r all lame excuses for this absurd price rise in india which is neither rational nor one in which an above average indian can buy with his own money.
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  • I don't agree with most of these
    1. There is no limit on investing in debt or equity. If anything, lower ticket size only allows more diversification leading to more interest.
    2. Transaction costs are 10%+ thus real estate would not be suitable to short term (2-5 yrs). Capital gains tax on equities is zero (>1 yr, STT 0.5%) so for large appreciation, equities would be much better.
    3. This sounds reasonable in theory but the behavior over the last few years in India is the opposite. Real estate has stagnated during high inflation periods (2010-12) while growing very fast during low inflation periods (2003-07).


    I have a different set of hypothesis
    1. A colleague in the life insurance industry told me that Indians love non-transparent products and hence LIC does very well. People love products that have some (small) minimum return as well as bonuses that aren't 'expected'. In a sense people want products where there is possibility to have a large appreciation. The concept of maximizing average returns is not pursued. That makes reality a perfect investment.
    2. It is difficult for money to exit real estate. This is partly due to tax treatment (real estate gains are taxed if not reinvested in real estate) and partly due to the generation of black money on sale. This encourages people to never book their real estate profits.
    3. Real estate is the only avenue for black money. For someone who has a large amount of black money (including via selling real estate), there is no other avenue to invest it in.

    ---

    As far as investment in real estate is concerned, the average investor that I have met (in my friends and family) have NEVER considered exiting real estate and doing anything with that money. The elder ones (~50 yrs) seem to be hoping to give the real estate to their children as inheritance while the younger ones (30-40 yrs) do not seem to have any requirement of a large chunk of money - except to buy a larger house and that is the only time they consider selling real estate.

    Nirmesh


    Originally Posted by ngokhale
    Three reasons:
    1) Real estate is the only asset class which can soak investment beyond a crore.
    2) Tax incentives and rent provide approximately 4% risk free return. So you end up paying only 6.5% interest on home loan. So as long as your property appreciates by 6.5%+ each year, you are not in the red!
    3) Real estate is the best hedge to inflation.
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