It is well known that Real Estate purchases are one big major source of investments in India. The amount of money that a real estate investor can make per month depends on various factors associated with this sector. Some of these are:
- Type of property?
- Purchase price and tenancy
- Location? and construction quality, and building upkeep condition of the property
- Price trend and vacancy in the micro-market where the property is situated
- And most importantly the investor's level of experience and expertise
To have a fair comparison, let’s start with understanding the nitty gritty of residential property.
- When we talk about an investor who is purchasing/investing in residential sectors and buys a ready-to-move-in house/flat, it can be rented out & the investor can look forward to having a steady rental income each month.?
- Residential properties tend to have shorter-term leases with individuals leading to constant churn and vacancy periods in the property. Considering the availability of the tenants, there may be a vacancy between the two tenants if the first one leaves. But if the same cycle continues every now and then, it could hamper the prospect of having a steady earning.?
- Another important factor that determines the exact income through renting the property will rely on factors such as the dimensions and location of the property and moreover, the current condition of the local rental market. If the rental market is strong, an investor should be able to earn a high rental income along with a good profit margin every month. Similarly, if the rental market is weak, the investor would need to charge a lesser rent in order to find a tenant. The higher side of rental yield in a residential property is 2.5% - 3.5%.?
- There is one more growing trend to make a profit in Residential properties which real estate investors use, and they call the process "flipping" properties. It basically means purchasing a property that is not in a good condition and is in need of renovations, they make the needed repairs and bring the property to a good condition, and then sell that property at a good price to get a higher profit. Flipping houses creates cost issues and comes with its own execution risks. What if the market price did not go up, thus the property owner will not be able to recoup returns commensurate with the upgradation effort and cost in addition to the purchase price of the property. make a profit out of it if the time he has invested in the property will be wasted.?
?But, when it comes to investing in CRE i.e. commercial real estate the returns are more predictable, and higher in comparison to residential property.?
- Here, the property you invest in is to be used for business purposes instead of living space. Primarily, income generated through CRE is generated by renting or leasing properties to large corporations safeguarded with long-term binding lease contracts.
- This includes office buildings, retail centres, warehouses, workspaces, and other types of commercial properties. Today, most of the CRE investments by retail clients are done in ‘pre-leased’ properties allowing the investor to derive long-term passive income without having to undertake leasing efforts.? ready-to-lease and are considered to be a growing sector.
- According to information collected from online sources and considering the trends in India, the rental yield in residential real estate is somewhat around 2-3%. There are additional deductions such as income tax, property tax & maintenance cost, which can go up to somewhat around 1.5-2%. On the other hand, in comparison with residential real estate, Real estate investors who focus on commercial properties, can earn a valuable profit each month through rental income(8-10%) and capital principal appreciation (5-10%). investing in Commercial real estate gives very high returns.
There are two new-age options to earn by investing in Commercial Real Estate: Fractional Ownership and REITs (Real Estate Investment Trusts). To sum up, for real estate investors it is possible to make monthly incomes varying from a few thousand to crores. What matters is the investor partner you put your faith in & consider the returns of any investment opportunity before investing in it.
- igh Rental Yield - 8%-10% rental yield with stable and predictable cash flo
- Capital Appreciation -? Year-on-year capital appreciation (5%-10%)
- Data Driven investment approaches that give you ownership of A-grade properties as the optimal asset is offered only post-selection based on 150+ data points.?
- Property Management - MYRE Capital takes care of all property-related management issues, this includes property tax filing and day-to-day management on behalf of the investors.
- Transparency - Investment processes at MYRE Capital are transparent, that allows the investors access to detailed reporting and complete costing disclosures.
