The Future of Real Estate Investing in India Explained ft. Integrow | E44

[@vineethnair6923]

You need to work on your vocabulary…. There are other words beyond “interesting “ …. You use it a million times in every podcast

[@paisasmart]

I appreciate the feedback man, I will try. - Varun

[@bilalameer57]

Frst

[@paisasmart]

Thanks for watching

[@swapnilp5823]

Audio quality is not good.

[@WalterWhite-og6wj]

Stupid arguem given by the real estate guy that rental yield should be only on your capital. 1 crore house with 70 lakh rupees loan as he said to look after 10 years. Well after 10 years, you would've already paid 1.04 crore to bank for that 70 lakh rupees loan. Now, let's calculate other expenses. Firstly, your 30 lakh rupees down payment. Next is 5-6 lakh rupees registration and stamp duty depending on your state. Basic interiors of 5-10 lakh rupees and 0.5% maintenance cost per annum to maintain that 1 crore house. Net net at the end of 10 years that house have costed you 30 lakh + 1.04 core + 5 lakh + 5 lakh = 1.44 crore rupees Which means you need to sell it at atleast 2.88 crore post taxes just to beat the inflation.

[@Effectualentrepreneur]

In this analysis, we start with the purchase of a ₹1 crore house, funded by a ₹70 lakh loan at a 6% interest rate over 10 years. The total cost, including loan repayment, down payment, registration, interiors, and maintenance, comes to ₹1.50 crore. Over 10 years, the house is expected to appreciate by 6% annually, reaching a value of ₹1.79 crore. Additionally, rental income at 2.5% of the property's value per year contributes ₹25 lakh over the decade. There are also significant tax savings from the home loan interest, estimated at ₹20 lakh over 10 years. After accounting for these savings and income, the effective cost of the house is reduced to ₹1.05 crore. Comparing this to the appreciated value of ₹1.79 crore, the net gain is ₹74 lakh. When compared to inflation at a 6% rate, the investment not only maintains its value but also provides a significant profit, confirming that it does indeed beat inflation over the 10-year period.

[@WalterWhite-og6wj]

@@Effectualentrepreneur first assumption of home loan at 6% is wrong. No one gets below 8.5%

[@Effectualentrepreneur]

​@@WalterWhite-og6wjLet's update the analysis by changing the loan interest rate to 8.5%: - **Purchase Price of the House**: ₹1 crore - **Loan Amount**: ₹70 lakh at an 8.5% interest rate over 10 years - **Total Cost (including down payment, registration, interiors, maintenance, and loan repayment)**: ₹1.65 crore (the increase accounts for higher interest payments due to the 8.5% interest rate). ### Appreciation and Income: - **Property Appreciation**: 6% annually, leading to a value of ₹1.79 crore after 10 years. - **Rental Income**: 2.5% of the property's value per year, totaling ₹25 lakh over 10 years. - **Tax Savings on Loan Interest**: Estimated at ₹25 lakh over 10 years due to the higher interest rate. ### Effective Cost and Net Gain: - **Effective Cost**: After accounting for rental income and tax savings, the effective cost is reduced to ₹1.15 crore. - **Net Gain**: The difference between the appreciated value of ₹1.79 crore and the effective cost of ₹1.15 crore is ₹64 lakh. ### Comparison to Inflation: - **Inflation Rate**: 6% annually. - **Conclusion**: The investment still beats inflation, providing a net profit of ₹64 lakh over the 10-year period despite the higher loan interest rate.

[@WalterWhite-og6wj]

@@Effectualentrepreneur again wrong. Here, you are being overly optimistic that from day 1 house will be on rent and will never be rent free even for a single month for the straight 10 years. Also, who will calculate the tax on rent which adds to your income and taxable at 30% Who will consider repainting of house every few years for tenants?

[@WalterWhite-og6wj]

@@Effectualentrepreneur and here's a fun fact: Invest that down payment as lump sum in NIFTY 50 index fund and assume 12% returns (in reality it is more than 13%) which translates to 93 lakh rupees in 10 years. Also, instead of paying 86,000₹ EMI every month, if someone stays at similar apartment for a rent of 25,000 and invest the difference of 60,000 in NIFTY index fund in SIP manner then it becomes 1.39 crore rupees. In total, person would be sitting on 2.32 crore rupees where tax liabilities will be lower compared to real estate. Also, after 10 years if that person buys a house with that money then he doesn't have to pay a single penny under taxes due to Section 54F. This simple calculation is misunderstood by several Indians and that's why they stay poor 🙂

[@loksaha]

Agreed with @WalterWhite

[@Effectualentrepreneur]

@WalterWhite exaggerated inflation to11.5-12% which is unrealistic