Real estate is one of the favourite investment avenuesfor investors with deep pockets.
However, many of them only think about the future value of the property while making the investment, rue investment experts. That is because they don't even want to consider the possibility of renting out the place.
If you want a proof, check the number of permanently locked houses in any new building in big cities.
According to investment advisors, this is a bad strategy, as a real estate investment is expected to fetch capital appreciation as well as rental income to make up for the huge investment and its comparative illiquidity as an investment.
Sure, rental yields are not much; but even at 4-6%, they are good enough to take care of the maintenance costs. The surplus, if any, is the icing.
"With the increase in the cost of property and home loan interest rates, house rents are also going up," says Pankaj Mathpal, CFP, managing director, Optima Money Managers. He is hinting that many prospective buyers are postponing their decision to buy home and instead are settling for living on rent, pushing up rental in many pockets in the suburbs.
"It is a good idea to rent a house than have it locked up. It gives some earnings from the property," he adds. But no amount of financial reasoning is going to convince some of these investors to give their property on rent.
However, many of them only think about the future value of the property while making the investment, rue investment experts. That is because they don't even want to consider the possibility of renting out the place.
If you want a proof, check the number of permanently locked houses in any new building in big cities.
According to investment advisors, this is a bad strategy, as a real estate investment is expected to fetch capital appreciation as well as rental income to make up for the huge investment and its comparative illiquidity as an investment.
Sure, rental yields are not much; but even at 4-6%, they are good enough to take care of the maintenance costs. The surplus, if any, is the icing.
"With the increase in the cost of property and home loan interest rates, house rents are also going up," says Pankaj Mathpal, CFP, managing director, Optima Money Managers. He is hinting that many prospective buyers are postponing their decision to buy home and instead are settling for living on rent, pushing up rental in many pockets in the suburbs.
"It is a good idea to rent a house than have it locked up. It gives some earnings from the property," he adds. But no amount of financial reasoning is going to convince some of these investors to give their property on rent.
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