Is it worth Investing in property?
Dr Vinod Tiwari
Empanelled Independent Director (IICA), Founder & CEO - Gulf India Solar Consultants, Former Director (UAE), PMS Expert, Regional Mentor (NITI Aayog), ESG, Solar Expert Awardee, Author, Speaker, Highest NRI Award Nominee
Hi there,
It is a big question to understand, whether or not I should park my hard-earned money into property/ land.
One thing for sure is that Property investment cannot give you as much returns to beat the inflation. And in another way, what is not able to match or exceed the current inflation is gradually deteriorating.
But, yes to have your own residence could be an emotional decision and in that case, the calculations should be kept apart. However, in today's world metro residents prefer rented accommodation, for mainly 2 reasons - Their job is transferrable and they can get fully furnished house at nominal prices.
However, if you are investing in a flat/ apartment/ house and it is not a growing location... chances are to even lose the investment to some extent. Maybe a piece of land or commercial property may give you month-on-month returns, but the major question is, how much will the return on investment (ROI) be?
There are major 5 risks involved while proceeding to this basket. Please review before investing and think of RoI.
1. The Real Estate Market Can Be Unpredictable
Supply and demand, the economy, demographics, interest rates, government policies, and unforeseen events all play a role in real estate trends.
2. Choosing a Bad Location
Location ultimately drives the factors that determine your ability to make a profit—the demand for rental properties, properties that are in the highest demand.
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3. High Vacancy Rates
Unfortunately, there’s always the risk of a high vacancy rate, because if you count on rental income to pay for the property’s mortgage, insurance, taxes, etc.
4. Problem Tenants
Bad tenants can end up being more of a financial drain (and a headache) than having no tenant at all and it is impossible to eliminate this risk
5. Lack of Liquidity
Because of the lack of liquidity, you could end up selling below market, if you need to unload your property quickly. which is not the case with stocks.
Therefore,
Be wise, because there is no alert advisory by SEBI to read all the documents carefully, before investing in the property.
That's all for now...
Best Regards/ Vinod Tiwari