4 - Buying Rental Property: Why Appreciation WILL NOT COMPENSATE YOU for low 3% rent & bad tenants

[@tradingwizard562]

Few points ... 1. Do not buy any property if you cannot clear loan in maximum 10 years. 15 years plus loans will destroy you . As per records 65 percent of ppl clear loans between 7 to 9 years and that should be the aim. The reason is if you are looking at rental income then you need atleast 4 to 5 good properties over 30 to 40 years timeframe else rental from one or two properties has little value. 2.Avoid flats altogether, go for plots where you can do your own construction and where atleast 3 builder floors which can be rented separately . This will ensure maximum rental yield from one house. So if you aim 4 to 5 houses over 30 to 40 years , then you are looking at 12 to 15 builder floors , each builder floor providing seperate rent . 3. In order to avoid kabza situation you need to keep an area in the house in your control, say stilt area where parking takes place and where you build a couple of rooms to control access to building, electricity and water services. This keeps tenants wary of problems from landlords . 4. You need not buy in Central areas , upcoming suburbs that develope over 15 to 20 years are the correct places for such investments but require good study and patience along wirh someone to control plot before you begin construction. 4. If you cannot play long term in this market , cannot construct your own house , cannot afford 10 years or less loans , don't enter the rental market . 5. That is why majority middle class will be maximum able to afford their own flat in society at the end of the day because to fulfill above criteria is difficult. 6. That said rental income is good source of income because property appreciates , even krishnaraj says his property appreciated 25 to 30 percent in 9 years so atleast there is appreciation unlike Fixed deposits where value of money will decrease over time . Also if you calculate percent of rental yield over your INITIAL INVESTMENT on property you will see that this also increases multifold in that if you get say 25k per month rent on 1 cr loan then after say 10-12 years your property becomes free of EMI , then as per increased rent it becomes approx 50k per month in that 10-12 years time frame. So now in a way you can say your property is now giving 6 percent return (50k × 12 months = 6 L , which is 6 percent of your original investment of 1 cr) . This 6 lakhs will keep on increasing unlike Fixed deposit where returns may actually come down in case interest rates go down . So decide accordingly because there is no GOOD or BAD in this feild. It all boils down to your affordability, type of property you buy , your ability to control the property, location of property and of course some luck is required.

[@Abhinav99922]

I am a second generation real estate investor/ business owner and i can say with utmost clarity that buying flats/ new construction property solely for rental purpose is stupidity. People like rent is like bank interest that will appear in your a/c on fixed date, in fact it is a headache that you have to negotiate with your tenant atleast 5 times a year on x,y,z matters and the biggest risk of tenant not vacating property is the highest of the highest risk. Just visit a local court and see how many tenancy cases are pending, even if the judge is your real mama, you cannot get an eviction order in less than 6 months

[@maver1ckgamingyt212]

But why would you want tenant to vacate in first place? I don’t have much knowledge on this subject

[@kishkavi8043]

When tenant drops payment of rent and terms is over and he doesn't vacate

[@bravewarrior1218]

As per tenancy law you can't lease your flat to one tenant for more than 3 yrs.

[@BrownByTasteProudByChoice]

​@@kishkavi8043that is true, and even if you come across a bad tenant over a period of 20 years, he can make your life miserable. I have seen that happen multiple times with people who regularly rent out flats. Once in a while they get a nasty tenant, who wipes off years of your rental gains

[@BrownByTasteProudByChoice]

@@maver1ckgamingyt212 if you get a nasty tenant who refuses to pay rent, or is unable to pay rent, there is nothing that you can do but go to court, and if you are lucky you may get a favourable judgement in 6-12 months

[@BrownByTasteProudByChoice]

If rental yields had made people wealthy, builders wouldn't have sold flats. 😂

[@parthaaec07]

Totally practical. Wish i had seen your video 10 years before !!! Add all the interests in emi for 18 years the see capita appreciation!

[@imransyed8552]

Very very good quality knowledge

[@kishkavi8043]

Krish Saab thank you just saved.. I was about to buy

[@degusapatel6109]

I agree with your views..we generally see only positives while considering buying a flat.

[@priyamd4759]

Thanks for the video. I agree Real Estate gives poor returns as rent. To live off the rent is perhaps not possible and definitely not efficient. I never liked Robert Kiyosaki et al advising to take massive loans and over a long period of time generate wealth. But they are rich and I am a nobody.

[@NareshShewakramani]

Correct . no middle class person will give rent more then 30,000 RS . if he can afford more then 30,000 he will go for own house on emi rather then rent. Also Flat rate does not increase so much. land price may go. You are actually truth on the face, some may not like it but it is truth.

[@deepkadamba7083]

What one forgets is the Rent Control Act. This act can be extended to other areas too and 11 month leave licence agreement will no longer to sufficient to evict tenant. So, tenant may effectively become owner of your flat if this act were extended. People say it will not happen. But tenants always are much stronger vote bank than land lords Who do you think political parties will cater to.

[@वायलेंटसेंट]

Once again Sir I respectfully don't agree with you by giving you some examples of my parents and what I learn from them first you have to buy property after calculating the numbers remember numbers are very important my parents bought a 30sy yard plot in delhi 20years back in a colony and built a five storey building now the rent we are getting is 38k per month minus the expenses 2nd example- 1 month ago we bought a flat in a builder floor in the same area size will be (25sy yard) around for 8 lakhs and rented out for 7k per month + with 7₹ per unit for electricity today my parents portfolio consists of 50+ such properties in delhi and Noida and yesterday I collected the rent for the first time and it was around 4.70 Lakh rupees Minus the expenses rental yield around 12-14% The key is that the investor should know about his investment and the numbers are important my father number 1 rule is don't buy a property on loan never 2nd rule is never buy a 50 lakh + plus property always prefer small plots and don't invest in commercial property ever

[@KrishnarajRaoUrbanNaxal]

I agree. If you are an experienced & knowledgeable investor in rental property, you will possibly earn good money from it. However, I believe that most people who venture into this field are inexperienced, ignorant & unaware of the risks. For example, people who typically buy M3M or Omaxe commercial properties have a very rosy picture of what will happen with them & their money in the long run. They are likely to lose money on such purchases. Do you agree?

[@KrishnarajRaoUrbanNaxal]

I will be happy to have a phone discussion with you. Feel free to call me anytime between 2 and 6 pm, or after 10 pm, on 9821588114 and 8169471229.

[@sumitgoswami9497]

How much money was invested for all those 50+ flats to get a monthly yield of 4.5lakhs?

[@kunalsen2123]

The per-property VARs (values at risk) are much lower in your family''s case than property prices of target market Krish is addressing, so it's frankly a different market and if you're buying in cash and growing organically, it can be fine. Also, even there, please note that cycles may not favour your plans. It depends on location too. For example, there are several DDA units in Delhi in Narela and Jasola which govt. is keen to develop for around a decade now but no takers for those EWS/Janta flats of 250 sq ft area and prices are staganant. They've been rejected thrice in public draws even by the poorest or poor who feel they're better in their unauthorised colonies. Greater Noida is the same story. Prices of the GNIDA XU etc. sector villas were stagnant for 10 years, then brokers incresed it artificially but real time deals are not being struck, so market's in a limbo. Faridabad prices are stagnant for 10 years. Unauthorised colonies have their own risks. So, it's again a gamble. For a single-time purchase, best bet would be to buy DDA 1BHK ground floor for 45-50 lakhs in a good, developed area with potential to build and expand in the future.

[@kunalsen2123]

@@sumitgoswami9497 I suppose the guy is talking about chawl-like units or barsatis or dwellings in unauthorised colonies or EWS flats in NCR where prices are low and rental yields are relatively high because of that. But these properties come with other big risks like fire hazards, no OC, POA based, no approved naksha, sometimes no registration also, etc. It's usually not for gentry. His rules of not taking loans and not exposing yourself to VAR >50 lakhs per rental property actually make sense though.

[@lvishal]

i think i agree with Krishnaraj Rao's arguments on rental properties in Indian cities.....the yields are too low and chances of appreciation are slim given the uncontrolled construction happening all around.

[@ameyajadhav7634]

I have bought a flat in old building. People here had bought flat for 6 lacs today they are fetching 60lacs after 20 yrs but after selling at such profit they are getting new flats at 70-80lacs in same area under construction project that too with less carpet area!! I agree returns will differ from place to place

[@kunalsen2123]

They are fools because it means they're staying on rent, waiting for their new house to get built (if it ever gets built and delivered). Never become a tenant if you've been a landlord. As per my estimate, builder defaults are 5-10% of all projects launched. Would anyone fly in an airline carrier with 5-10% crash rate?

[@kunalsen2123]

Also, LTCG (long term capital gain) from house property sale has to be set off if new unit is delivered within 3 years of you selling the original house. No builder completes projects in 3 years nowadays, so these sellers flipping properties have to eventually shell out huge tax on STCG basis. No broker reveals these facts to them when they sweet-talk them into falling into these traps. It's a scandal that some are normalising under construction property purchase as though there's no alternative.

[@degusapatel6109]

You have got very good returns but I doubt the similar returns if one purchase flats at quite high price.

[@pratikdedhia]

Hello Krishnaraj Sir, the premise of the discussion is understood now and most of the points you have stated looks valid now.👍

[@HappiestMindSet]

Very Good 🎉🎉

[@chahem]

I have done all the calculations on excel sheet systematically. You stand to earn 50 lac to 1.3 cr in Sir's example. Compare this to 2.3cr to 7cr depending on the Roi generated on the amount which can be invested if one doesn't purchase the property.

[@Anonymous7_12]

I also bought 1 flat few years back.got little appreciation but INR currency depreciated a lot. So it's almost 0% appreciation.

[@BrownByTasteProudByChoice]

NRIs are doomed if they invest in property for appreciation

[@saritaprasad4295]

In parel 32000 rs rent for 1 cr 1 bhk flat

[@BhavyaSaran]

Appreciation from land is much better than flat's rental income + appreciation.

[@geg375]

Appreciation also happens based on the location and brand of the property. Also renovation will be required as well as regular every 3 years and it costs a lot...

[@dylanpereira7543]

One BHK in khar West worth 2 CR you are getting only Rs 40 to 45 thousand rent sir.

[@prathameshpatil8834]

Haa toh logon ki salary bhi kaha Jada hai

[@BrownByTasteProudByChoice]

@@dylanpereira7543 3 percent rental income is keeping with the national average

[@dhananjayrudrawar7144]

Sir es video me aapne ek ek shabd sahi bola hai Flat ka appreciation Etna nahi hota hai I sold my flat at same cost after 5yrs in Wakad Pune

[@riteshvs4949]

U have to wait till 25 to 30 year

[@DJU-0072]

Brw Which society in wakad?

[@sanjivkeskar2547]

Nice advice. Thanks. But pl guide us what will be the correct approach while buying flat especially in Mumbai ? Do you mean flat should be purchase exclusively for own use? Should not be given on rent even one has not taken loan to purchase it ?

[@rameshgawade5492]

Absolutely Right🎉

[@thecontrarycontrarian4230]

Is it a good idea to invest in a two bedroom apartment with parking in an upmarket area with full cash and no loans taken. Then give it for rent? The cost of the apartment was 1.25 crores in 2018 and the rent for the same is 40000 rupees a month

[@BrownByTasteProudByChoice]

It depends on the city, suburb and age of property. 40k rent may seem decent, but minus maintenance and taxes will be about 33k which is just about 3 percent returns. Also, you may be liable to income tax depending on your tax slab.

[@rizwanhaider2306]

Lot of way their to save profit,it will profitable but need to playful,with emi need to start SIP so flat loan will compensated

[@abhinandantripathi3624]

Appreciate the insights shared by you that people often overlook, but why do you term yourself as "Urban Naxal" sir? :)

[@KrishnarajRaoUrbanNaxal]

I try to achieve social & economic justice for ordinary city people. I do this armed with video content, not with guns. Hence, Urban Naxal :)

[@abhinandantripathi3624]

@@KrishnarajRaoUrbanNaxal 🙏

[@friendofall1824]

Sir, is there any other investment plans apart from bank interest or LIC?

[@intellonaik3135]

Invest in mutual funds

[@KrishnarajRaoUrbanNaxal]

I am not any kind of investment expert. So the answer is, I don't know.

[@ishwardevi134]

Rent will also appreciate

[@banty2beta]

sir you are great

[@IdoCareForPeople]

only reason for propety appeciaion of last 2 decades were perpetual fall in interest rates..and raising bank credit to housing.... that trend has now come to a grinding halt..... you wont even make 3% per year in appreciation going forward....with rates hittign 10.5%.... you will be a loser for the coming decade.... alos news incomes are about to fall for highly paid IT guys due to recession on AI driven automation.....

[@gauravshetye]

Pls guide which is better buying or renting?

[@amitamit-lr5sh]

Buying real estate asset is just like getting in a situation depicted in film KHOSLA KA GHOSLA...shrewd property dealers call buyer UNCLE JI....UNCLE JI....and talk like they are their real son but once payment is done, Then their approach is TI KAUN AUR MAIN KAUN......honest middle class people don't know what to do in fraud situations....appreciation talks is now a distant dream....gone were the days when people bought 2 bhk at 10 lacs, 3 bhk at 16 lacs and now their flats are worth 1-2 crores ....means appreciation of 10-15 times.....now this is clearly not situation in future ..this can't be generalized now as more and more buildings are coming almost infinitely. It's now not easy to rent your 1 crore flat even at 25,000 as majority of people earns below 50,000....

[@santoshkarkera9371]

Sir your numbers are not correct 100000 rent is in marine drive and cost of property is atleast 6 crores... for 1cr property rent will be 20k max

[@KrishnarajRaoUrbanNaxal]

Right, so the returns are much worse than I made allowances for. Correct?

[@santoshkarkera9371]

@KrishnarajRaoUrbanNaxal yes sir you never disappoint your videos are always educational thanks for sharing your wisdom with us 🙏

[@khwajamdasim7630]

एक वीडियो बनाइए प्लॉट ले कर 1 करोड़ खर्च कर के कुछ फ्लैट बना कर भाड़े पर चढ़ने का

[@someonesomewhere9133]

Completely illogical and non fact based video. In big metro locations like Delhi NCR and Bombay, you can easily get 50 to 60,000 rent per month on a flat worth 1.25 crores. This rent will keep rising by 5 to 7k most years. Therefore the rent will double in less than 10 years and easily quadruple in 18 years. In addition, the value of property will easily go up by 3 to 4 times in this timeframe. Yes, after inflation, the gain might not be much but what other options are there? Keeping money in an FD will do much worse. Real estate and stocks are the only things that keep lace with inflation. Take a look at homes that sold for 2 lakhs in Delhi around 1995. Then the monthly incomes were around 3 to 5k. Today, things are much more expensive and incomes are 1 to 2 lakh per month and these same homes are worth 5 to 10 crores. See how they have kept up with inflation. Also use of strange words like “bhadut” for tenant. Proper Hindi word is kirayedar.

[@KrishnarajRaoUrbanNaxal]

Bhadut is the word for kirayedar in Gujarat & Maharashtra (where I live), and is used in Hindi also in these parts. The word bhaada is used instead of kiraya here. However, I will take care to also use the word kirayedar. Coming to your main criticism: I totally agree that there are many, many places in the country where property appreciation and rentals are phenomenal. However, there are also places where the returns are poor. Quite often, the places that are most aggressively marketed will give the lowest yield.

[@Vijay55234]

Where do u live in gujraat sir?

[@KrishnarajRaoUrbanNaxal]

@@Vijay55234 I live in Mumbai. I used to live in Amdavad

[@Vijay55234]

@@KrishnarajRaoUrbanNaxal Thank.sir..flat mai sae kuch saal rahane kae baad exit karne ka right time khiya ho sakata hai after possession...toh loss thoda kaam ho..what is your opinion sir?

[@Carspak322]

Dear sir Kindly advise if some one purchase property on cash with out borrowing for rental incone?

[@kishkavi8043]

SAVED

[@sanjaymule2648]

आपने बिल्डिंग का depreciation नही गीना।

[@vishalkanwar2333]

Enter Sangoo uncle😂😂😂

[@kunalsen2123]

Already entered chats through burners accunts and got burned. :)

[@BrownByTasteProudByChoice]

​@@kunalsen2123😂

[@niyazahmed234]

I am a student i like a beautiful girl in my class i never told anyone my friend also like that girl may be 5-10 boys secretly like that girl should i flirt with her , just talk with her, ignore her i don't know what to do ,can you guide me

[@Vijay55234]

Forget about that girl...as that girl is in high demand as per your statement...so lot of compitition...better forget about girl.. appreciate her beauty but don't chess her... otherwise u will loss lot of time...

[@deepkadamba7083]

You decide It's your personal life why you want public to vote for what you need to do.

[@DeepakKashyap-th1bu]

Mr. Rao. You seem to be persisting with this silly assumption that property value will remain more or less the same after 18 years , factoring in inflation. You're here contradicting yourself. When you assume real estate interest @10 % , you need to factor in inflation here too in that case. Taking inflation say @ 7%, the real bank loan interest will come to only 3%. You need to do your maths properly and use common sense, before advising others. And forgetting your own isolated example, if you look around , you'll find that most real estate in urban/ cosmopolitan areas has appreciated over 10 times in 18 years.

[@tradingwizard562]

Absolutely 💯.

[@NavneetThukral]

The property rate is not increasing at a very good rate...

[@KrishnarajRaoUrbanNaxal]

Deepak, there are many simultaneous realities in India. There are the rosy realities -- a.k.a. the upsides -- and there are also shitty realities -- the downsides. Most journalists nowadays prefer to turn a blind eye to the latter, which are a lot more prevalent than you like to believe. I look at the ignored realities, and call attention to them from those who are most likely to be hurt by such realities. I trust that is not problematic in your eyes?

[@KrishnarajRaoUrbanNaxal]

Deepak, a lot of content on my channel are first-hand accounts of people who have lost lakhs or even crores of rupees due to the activities of corporatized builders like Godraj, Lodha and Runwal. So, do you want to frankly discuss this side of things? Or you want to maintain a studied silence about such things, and only debate with me on property value? Either way, if you are feeling courageous enough to call me and discuss, my nos are 9821588114 and 8169471229. Message me if my phone happens to be switched off, I will revert asap.

[@raghavkwal20]

I opine flat buying is not worth the risk if you are investing. If it gets down you will lose too much.

[@rofl-ing]

From Orissa, working in Pune, and buying property in Bengaluru - I sympathise but this makes no sense. Bounced cheques are your best move forward - clean case. Whenever you get into any transaction, please see if the consideration from both the sides is sufficient and on roughly equal terms. If you are an individual getting into a contract with a company, please check if the contractual service you are paying the consideration for is well-defined and deliverable immediately and if not, please make sure you have enough funds and time to approach legally because you will most likely have to fight to get even the defined.

[@zeppelin3969]

Krish- the Urban Naxal , a self annointed title has come out with this video, the 4th in the series and supposed to be a course correction but turns out to be an excercise in justification of his earlier blunders. In his earlier videos he set out to demolish the idea of buying a property for rental yields. Then to prove his theory or surmise he brought out all the negatives of renting out property, magnified some of the negatives, created some out of thin air to give weightage to his assumptions and most importantly missed out a few very important positives or advantages of renting out like capital appreciation, regular and yearly hike in rentals, tax benefits u get when you take a loan for a property. The basic issue with these videos is they are like Man Ki Baat. U can say what you like, include examples to justify your end, hide facts, brush away some points not in your favour etc. He also dare i say like many video makers has a troll army which takes their masters line and pounces using illogical reasoning without understanding, in the comment section. So, when he got some not very positive comments to his blundering videos, he decided to take on his detractors and give a moral boost to his paid supporters. He reduced the rental income to 1/4th per annum because it suited him ( earlier it was his mistake of assuming Rs.1 lakh rentals pm on 1cr property) and grudgingly gave in to capital appreciation benefits but wld not agree to increase in value by 3 to 4 times in 18 years by far a conservative estimate. Here, pl dont bring in examples of tier 2, tier 3 cities, remote villages in India to prove your point. He further quotes his own example of his flat in Western suburb of Mumbai saying saying the value has risen by 30% in last 9 years to justify. I say i am prepared to buy his property today at 50 % more than his cost of purchase (provided he gives me all relevant proof, receipts of the builder for his payments) . Pl dont mislead 🙏. Then to mask his blunder he reduces the capital appreciation estimate after 18 years to 3 times. Not done. U can go on making such videos which are far from truth and make yourself and some die hard paid fans happy. The moot point is Mr.Krish agreed there is something major like appreciation which he left out due to selective amnesia. A topic which can be compressed in one video he stretches to 4 or 5 videos, hams and ruminates and makes it a stressful topic to view . Having a king size ego is one thing but missing out deliberately imp points to justify your stance is another. Finally, Mr.Krish ppl dont buy property for rentals but for the capital appreciation. Rentals are a bye product. I too will not support the idea of the decision to buy a property for Rentals Alone Thanks 💕

[@chahem]

If you think 3 to 4 times in 18 years is conservative then your wrong my friend you have not seen the market enough. And the assumption that it will grow just like it grew in the past is ignorance.

[@zeppelin3969]

@@chahem I am sorry which city, area , which building and what construction u r considering i do not know.Is it a chawl ? A chawl in Dharavi or Worli has good value. Unless i know in detail about the property i cannot comment in right perspective. I had mentioned if u read properly my comments there is a caveat ie leave out tier 2, tier 3 , tier 4 cities, towns, remote areas, uninhabited places, far from infrastructure development. These are exceptions which dont make a rule like u have ppl also criticising our Father of the Nation. Like i gave the example of stock market. When the sensex was 4,000 ppl said it will not cross 10,000 now it is 65k and in a couple of years it may cross 1 lakh. Hold on if u go through also Real Estate graph at different times Real Estate has shown more than disproportionate increase like in 2008 to 2011 and before too in 1980s . The increase will not be proportionate every year suddenly u will witness substantial increase for a few years. India has population , good developed areas are less. Dont talk about remote areas and under developed places. If u buy a house in such places where there is no demand or development then u r the loser and ignorant

[@chahem]

@@zeppelin3969 are you saying a 2.25 crore 2bhk flat in Powai/Andheri is going to be worth 10 crore in 18 years?

[@NavneetThukral]

Property will not increase at the same as much as it has increased in past..the past is gone..times are challenging...

[@zeppelin3969]

@@chahem Yes and more depending on brand of construction, quality and amenities. U will have to retain for 18 to 20 years. Only investor sells the flat in 2years time or a person who is in need of money. 😁

[@bharatsingh-jn3go]

2महीने खाली रहा तो क्या होगा।