[2000rpm]

Originally Posted by jigar1791@gmail

Is it wise to go for the plunge? Are my corrections of any sense for us, salaried income folks?

I am in a similar boat and the reason I am looking to purchase a property in the same ball park as you is for the tax savings on principle as well as interest paid. I am fed-up of paying taxation to the useless government / s for everything. (all parties)

If divided between two co-owners, this can come out to be substantial since both parties can avail the principle and interest benefits.

The tenure for the loan may need to be lower though.

[sukhbirST]

The rental calculations are based on future which can never be accurate. Just to give my example first the demonetization hit my tenant and he was jobless. When he finally managed to reduce the rent owings (rent kept going down)there was covid. Again he lost his job and was unable to pay. Now every year At least 3 months rent goes for maintenance and I find it foolish to have invested.
Next is your interest rate - this is bound to go up. What is affordable today could be painful later. I think you need to fully understand implications of HRA/Itax on rent/Exemption limit etc. RWA maintenance etc are to be noted as they are paid by owner.(some places)
Expecting a child and all going well is not correct. Anything can happen. Today best investment is in education of child. If child is not on right track both investments in real estate or stock are useless. Personal experience tells me those who invested in child future are not at all bothered about house or stock/MFs.
Next a house is livable only if right conditions like location, connectivity, traffic, pollution, civic amenities etc (list is endless) are there. Please understand these are dynamic and change down the years.
Another point is the interiors inside which are changing fast and are linked to technology.
My advice is please wait for the house.

[itsmejack]

Originally Posted by sgm

I'm no way connected to any of the below as I haven't used any PMS. Some of the popular ones that I follow.

https://www.adigitalblogger.com/pms/...-veliyath-pms/ by Porinju

https://truebeacon.com/ by Nikhil Kamath, co founder of Zerodha

https://marcellus.in/

You can also consider "Small Cases" for theme based direct stock market investing. Please note that some of them are fee based.
https://www.smallcase.com/

Small Cap funds are a very good option for excellent returns, provided the risk appetite allows one to subscribe to one
Kotak Small Cap Fund Direct Growth
Axis Small Cap Fund Direct Growth

My experience with Equity intelligence PMS (Porinju Veliyath) has been good so far. I have invested in this PMS 3 years ago. I have also invested in True beacon, but it is too early to comment about the performance

[white-power]

Real estate is considered an investment because it is an appreciating asset. But that assumption is not entirely true for apartments. An apartment is land + building with the ratio skewed to the latter side. The few sqft of undivided share of the land you get would be a very small part of the 1.1 crore you spend on buying that apartment. Contrast that with a villa where about half the cost of that property would be on the land.

So when the apartment becomes old it loses value and the appreciation in land value will not be able to negate the loss in the value of the building. If you don't plan to live in the apartment you buy, stay away.

[CarJunki]

Just one more point to consider from real estate rental income.
Tenants prefer newer dwelling units. The older ones 20+years do not hold as much attraction for rental purposes.
Every construction, when it becomes old, will require higher capital outflow towards maintenance.

The rental income is not really an income, its more like a cover for maintenance + some entertainment value. Nothing in terms of real income.

Please also remember when you want to dispose off the property, you will find it very difficult to achieve. Remember the builders and developers have an army of sales and marketing experts to close sale deals. Individual owners do not have that luxury. So when you go and try to sell, you will find the real problems.

[aniketi]

Originally Posted by jigar1791@gmail

We can manage the initial down-payment amount to around INR 40 Lakhs, which will leave a loan liability on me against the outstanding INR 70Lakhs. Checked with banks, current interest rates on home loans are at around 6.5-6.8%. Calculations for a loan outstanding of INR 70Lakhs on a tenure of about 30 years works out to INR 45,000/- at 6.7 %pa, and my plan is to have the flat rented-out on immediate basis upon possession. That shall bring my rent to EMI ratio at 60%, and I plan to foreclose the loan outstanding in about 10 years.

Just piece of advice from me - Never ever take home loan for 30 years. You end up paying too much interest. Just see the table of repayment and you will know what I am talking. First few years you will be paying 5.4 Lacs per year, out of which most of it will be interest only.

All the best, happy investing.

[vinaydatla]

Originally Posted by charanreddy

Portfolio Management Scheme sounds interesting. I have just crossed the threshold for being eligible for it on my Equity / MF investments. Has some one already used this service? What are the costs / risk factors ? I know it’s regulated but how does it compare to Nifty 50 for example ? Any pointers here to set me in the right direction deeply appreciated .

I know people who are availing NJWealth's PMS services. Back in October 2018, when the accounts were opened the minimum investment was 25L which has been now increased to 50L.



As of today, the absolute returns is around 85% even after suffering multiple market crashes in 2019, 2020, 2021 and this week with a CAGR of 22% on multi chip and 30% on blue chip portfolios. Redemptions are the dividends received so far in the bank account.

Fund management charges are around 3-4% of the turnover. In my opinion, it is completely worth it.

[RachhaMan10]

Originally Posted by white-power

An apartment is land + building with the ratio skewed to the latter side. The few sqft of undivided share of the land you get would be a very small part of the 1.1 crore you spend on buying that apartment. Contrast that with a villa where about half the cost of that property would be on the land.
So when the apartment becomes old it loses value and the appreciation in land value will not be able to negate the loss in the value of the building. If you don't plan to live in the apartment you buy, stay away.

Complete second this! Buying an villa or a row house gives you very high UDS(undivided land share) in my case I got UDS higher than the built up area of the house. Many people ignore the UDS and just focus on the built up area, at the end UDS is what matters.
I would generally suggest to buy a villa or row house even if it’s outside of the city, eg in Bangalore you can consider Sarjapur, Budigere, Hennur Road rather than buying an apartment in the city.
I searched of 1 year and visited around 25 to 30 properties before I made a decision.

Originally Posted by aniketi

Just piece of advice from me - Never ever take home loan for 30 years. You end up paying too much interest. Just see the table of repayment and you will know what I am talking. First few years you will be paying 5.4 Lacs per year, out of which most of it will be interest only.

All the best, happy investing.

Well depends upon the bank you choose, in my case it’s SBI and I have taken loan for 25 years but I keep increasing my emi every year by 10% and also make lump sum payments when there is extra cash from bonuses. If I continue doing the same loan will be closed in 10 years. Since there are no pre closure charges in SBI no need to pay anything at the end.
If you are going for private banks look for the options where you have free preclosure else you have to pay a penalty.

[Jaisalmeriya]

All things considered and some valuable recommendations from fellow forum members, in case you are still inclined towards real estate only, west Pune (closer to the Mumbai expressway) offers some great value deals (1-BHK/Studio in a fairly reputed builder's project) in the liquid money you are ready with.

Right ticket size, configuration and the location have been key factors in optimum entry-prices and the rental yields to hold up generally.

[sunilch]

Originally Posted by jigar1791@gmail

Is it wise to go for the plunge? Are my corrections of any sense for us, salaried income folks?

Too much information to process

Quick response to your query based on my experience (I was in similar but not same situation when I was 31):

1) Do go ahead with the apartment purchase if:

• You are comfortable with this EMI
• Don't foresee any future large liabilities coming up
• You are confident that the apartment will be completed on time

Advising you this purchase now for your future 10+ years down the line.

You see over time, your needs will grow in terms of apartment size to live in. Also, you would want to move to a newer/better apartment. Older apartments (where you are currently living), over time, depreciate in value relative to new ones. So this investment will be a hedge against any future needs you may have. Real-Estate has ups and downs in longer cycles. Over decades prices either stagnate or go up crazy suddenly when population growth is fast, such as in India.

This investment will be just like investing in Gold, with the benefit of not requiring any holding/storage of gold. The rental income will be sufficient to keep the property in good shape and pay the taxes/repair expenses on it. Either you can move into this property at a later date or sell it and buy a better/newer one with incremental savings later. But just as everyone has mentioned, residential rental income in Mumbai can't be relied on for your expenses/lifestyle. It will be better to invest the said amount in better Dividend Yield equity.

2) Kids and parenting are wonderful dimensions of life. Ignore anyone who says they increase your liabilities.
3) Stick to the apartment/builder you are comfortable in Mumbai. No need to go to far off places or other cities.


So if you are planning for long term, do go for it. Increased income when combined with increased investments (as you have already planned) is the right thing to do. For better safety feeling, you can max-out your loan at start and pre-pay at periodic intervals with any surplus you may have. That will give you a good cushion to rely on if needed.

[aniketi]

Originally Posted by RachhaMan10

Well depends upon the bank you choose, in my case it’s SBI and I have taken loan for 25 years but I keep increasing my emi every year by 10% and also make lump sum payments when there is extra cash from bonuses. If I continue doing the same loan will be closed in 10 years. Since there are no pre closure charges in SBI no need to pay anything at the end.
If you are going for private banks look for the options where you have free preclosure else you have to pay a penalty.

Calculate again, you will find that you are paying more only when you take for more years. When you take loan for 25-30 years, first few years EMI's you pay almost 100% goes into interest only. Ask your bank to provide all calculations in table. Even if you increase EMI by 10% next year, you will pay high amount in interest only. I always take home loan for 10 years only and finish it within 5-6 years. Currently my 3rd home loan is running and I will make sure that it will be paid of within 5-6 years again. I tried to pay least interest for last 2 home loans successfully. Last time HDFC manager was convincing me for not to pay so fast but I didn't listen to him, off course for saving my hard earned money

[RachhaMan10]

Originally Posted by aniketi

Calculate again, you will find that you are paying more only when you take for more years. When you take loan for 25-30 years, first few years EMI's you pay almost 100% goes into interest only. Ask your bank to provide all calculations in table. Even if you increase EMI by 10% next year, you will pay high amount in interest only. I always take home loan for 10 years only and finish it within 5-6 years. Currently my 3rd home loan is running and I will make sure that it will be paid of within 5-6 years again. I tried to pay least interest for last 2 home loans successfully. Last time HDFC manager was convincing me for not to pay so fast but I didn't listen to him, off course for saving my hard earned money

In my case I took loan from SBI, the components of EMI are calculated on the monthly basis. For example my EMI in the first month is 50k (25k principle+25k interest) but I pay 70k only 25k goes to the tax as its supposed to go and rest 45k will go to the principle. This will reduce my interest component for next month as the additional 20k is deducted from my principle.
I keep track of this in the SBI Yono app, Also as I said earlier depends on the bank where you take loan from. This is one of the reason why people prefer SBI homeloan even if its cumbersome process. Also in Bangalore, SBI gives out loans only to an A katha property (the ones where every by-law is followed while construction and proper conversion of the land is authorized by BBMP/Panchayat).

[Kickdown]

Originally Posted by jigar1791@gmail

Is it wise to go for the plunge? Are my corrections of any sense for us, salaried income folks?

Besides the pertinent points mentioned in all the posts above, one thing I always consider while investing is how easy will it be to liquidate the investment should there be an urgent need of funds. Distress sale of property is something one needs to avoid. MFs are desirable in this regard.

[skywalker_7421]

Fellow 34 years old techie here. There are multiple things to consider:

• Don't forget to consider the stamp duty, registration, loan processing charges and making the flat ready to be lived in which should come at around 10% of the property value. Keep at the minimum 10Lakhs for that to be paid when the apartment is completed.

• Don't invest in the property thinking it will always be rented out at the maximum rent you envisage. Keep a margin of error and think of it being occupied 50% of the time at 70% of the standard rental yield (2%). If you will be able to bear the emi cost, go for it.

• If you finally decide to go at it, consider taking the maximum loan out for the longest possible. The best will be to go for 20% down for 30 years. At this time period, the bank is at a loss, not you. Contrary to popular belief, banks want you to pay home loan neither too early, nor too fast. Remember to factor in inflation. The 6-7 lakhs of annual EMI outgo will be 3-4 lakhs in real terms 15 years later (see the PresentValueOfFutureAnnualEMI column in the attached table).
  
  So, if you just pay 22 lakhs down and invest the 18 lakhs in even an index fund at a conservative 10% return, you will effectively be loan free 12 years down the line as a basic Systematic Transfer Plan from your mutual funds will cover the EMI. Check the "MutualFundWithSTP@10%" column.
  
  Alternatively, depending on your job stability 12 years later, you can continue paying the EMI from your salary as factoring in inflation and as shown in the PresentValueOfFutureAnnualEMI column, you will feel the pinch much less. If you do this, at the 15th year, your 18 lakhs would have outgrown the outstanding loan (Check yellow line). Going forward, you can keep paying the effectively lesser EMI in real terms and enjoy compounding for next 15 years.
  
  
  

Plan to be "Net Debt Free", not "Any Debt Free". Taking long term debts and giving short term debts is in your interest. Avoid taking more than 5X your annual salary. Think whether you would buy the property if you had 1.1 Cr in Cash right now. If you don't don't buy it.

Real Estate is illiquid, but that works in our benefit sometimes especially if one has tendencies of keep shifting investments and jumping to the next best thing. e.g. you would skip crypto investments if this capital is locked in.

As you see, there are multiple factors at play even in this narrow aspect of the plan. You also have to see your risk tolerance and the psychological aspect of debt. Many people won't be able to hold out for 30 years. Some may hold out, but start gambling with the saved capital. There are numerous other factors to consider.

Consider talking to a SEBI Registered independent financial adviser who charges you a fees and fields your interest. Avoid the ones who get commissions on products they recommend.

[charanreddy]

Originally Posted by vinaydatla

I know people who are availing NJWealth's PMS services. Back in October 2018, when the accounts were opened the minimum investment was 25L which has been now increased to 50L.

Looked at NJ Wealth briefly yesterday. Must say the surname of one of the founders does not inspire confidence. Would you say that PMS are in general fraud risk free. As in, I am OK with market risk, but is fraud on part of the founders / CEOs a possibility ?