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- Dear frnd,
The model shown is good but it is very much skewd towards rental income.
This kind of calculation might not give right results in Indian scenario. My logic is based on following examples
1) A flat costing 75 lakhs gives a monthly rental of 17000~22000.
2) A plot in NCR( may be G. Noida / Faridabad) costing 30 lakhs with only compeltion work( one room set only). This kind of property will show alomost no value in the model given.
3) This model is not calculating the intrinsic value of land in a demand driven market.
4) The model is not considering the variable inflationary expectaions.
5) The model has more concenteration on the facilities of the houses which will be given on rent and will fetch you returns.
How ever the model given by you might give very good results in markets like US and other matured markets, where the rental income vs the cost of house has some sense.
Also this model might be used to determine the true value of houses under constrcution.CommentQuote0Flag