Investing In Real Estate? Avoid Taking Multiple Loans

There is a school of thought that property and Gold are two best investment options over equity. There were also people who believed that gold prices can never come down has faced the same depressing situation some two years back. Although gold has been performing well in the last 10 years, if you look at the last 30 years, the annual returns of gold would not be more than the single digits. The situation had occurred not because of gold returns but depreciation in rupee.

Have you ever asked yourself a question that how much returns you are earning on investment in properties? It would hardly be 2 percent on residential property and some more for commercial properties. Land gives no return and the gross returns on residential property would be about 3 to 4 percent. This is so because when considering other charges like society charges, levy charges on rental amount, brokerage fees and so on, the leftover amount in hand will be around 50-60 percent.

Along with these, there are other related costs like registration, stamp duty and so on which are added to the total property costs. When owning a property, the owner has to maintain the property which is again an added cost.

The loans taken to buy such assets are long term loans and when taking such loans, the borrower is actually committing for a period of nearly 20 years to get a property which is again a big risk.

Also Read: Pay 600 Crore for a Two-Acre House in Delhi