Hence we are very enthusiastic about real estate investment here. But why Bengaluru?
For one, the developers are quite progressive. There is of course no doubt that the IT boom has contributed to this attractive real estate jungle. Plenty of ‘trees’ for shelter so just choose the right one and precious sap will emerge down the line.
Okay that’s the attraction part. So, what makes Bengaluru sustainable for such investment? Well, it’s been noticed that people come here from all parts of India and don’t usually leave. The reasons – a genial culture, alternative job opportunities and a relatively healthy climate. Bengaluru is the new Mumbai, where everybody in the country believes they will find some work and prosper. Even runaway slum dweller children who in the mid 1960s chose Mumbai, are not found in Bengaluru by popular consensus.
Bengaluru is the fifth most preferred destination in the world for setting up of innovation centres by, global multinational companies, according to one report. Apart from Apple, Visa and Airbus, Bengaluru saw 9 billion dollars being invested in start-ups. The sheer power of these brands, apart from of course the obvious need for leaders and employees to move in here will definitely play a role in its further booming real estate as has always been the case.
What else drives this growth? The Metro rail network that’s slowly emerging is another sure fire cause. Properties in general and of course particularly proximal to metro stations will see a huge rise in their rates. Not something the old Bengalureans are accustomed to but they are getting there soon. Haven’t you see rental adverts in Europe and much of the developed western world that unfailingly mention their closeness to a ‘Tube’ (London Underground), MRT (Mass Rapid Transport) Station and similar such names. You’re definitely paying a higher rent to stay or live there. This will be a big boon for the appreciation of real estate. Even now, in anticipation of the networks to be build, appreciation has come for properties that are in the area.
Further, there is also talk of a suburban rail, much like Mumbai, Kolkata and Chennai’s. This is truly a mass transit system for the economically lesser abled citizens who of course form a vital part of the task force.
Sometimes, we don’t fully understand this. So it’s a good idea to share your thoughts with a professional property management company who will lead you to a good investment.
Don’t forget even if you don’t want to be remembered as a dynamic investor in youth, it’s always worth investing so you get to retire with plenty to spare. You can check out some thoughts on this particular aspect at http://www.propertyangel.in/blog/retire-on-rent
Every think your investment can have the best of say a modern day cricket match with the best allowable global stars being a part of the investment? Then it’s time to play T20 in the property market.
REIT may just be the new T20 where you merely have to be a spectator and allow the returns to unfold. So what is REIT? Well, it’s a Trust, like the kind you associate with wise people heading it and ensuring regular disbursement of cash for the institutional/individual, in this case you who is pooled in with other likeminded investors. We all know that it’d be naive not to invest in ‘property’ these days, whether the real land or in another form. It’s like gold. And remember times are achanging, so you’d be heading into the commercial space via a hand held process! It’s also a good idea to have a diversified portfolio in your investments, right? I mean, you can invest in multiple apartments (read our opinion at http://www.propertyangel.in/blog/retire-on-rent ) to get a good retirement rent. Likewise, you may have more energy but also want to try the different path – REITs. The ‘Trust’ you give your investment money to ensures yours and other investors pooled savings are jointly invested in offices, residential units, hotels, shopping centres, warehouses etc.
Why would this huge Trust (think of it as a conglomerate) even think of pooling people’s money into a non private space like this? There’s obviously money to be had. And the profitability is huge. We know you can’t afford to invest in the whole of the shopping centre for example. So REIT’s merely pick the next best option, that of creating a community of you folks so your aggregate investments help ‘pick up’ the huge commercial property. Hey, a decade of two later you don’t want to look back and regret being conservative and realising you “lost money” because you didn’t maximize. It’s boom time now.
Features of REIT:
And spend your days on an exotic beach? Sounds too good to be true, eh? It need not be. It’s very possible to achieve this with the right strategy and planning.
Let’s consider the event of “retirement”. There are 2 ways to “retire”, which is considered a time where we stop actively working to earn an income. This first way is to build up a corpus, so we can live on our savings. The challenge here is to know how much we may need, and for how many years we may live, especially given rising prices, medical costs, and longevity trends.
The second option is to build up streams of passive income. Rental income is the surest form of passive income, where not only do the rental returns increase over time, your capital (property value) also increases, especially in a country like India. Its also one of the most safest forms of investment.
Earlier, the stock market helped you retire. But you never really have full control of your investment. It’s often said “Try buying a stock below market value. It’s impossible.” Well, you can buy a stock that’s undervalued but not one below market value. With rental properties, you can buy the property below market value. You can choose what to repair, how to finance the property and you rent the home. You can hire a property manager to perform these tasks.
In stock markets, you do not live off cash flow. You live off interest and appreciation your stocks have made for you over some years. When you start taking money out of your retirement accounts, you stop making as much money. On the topic of retirement, it is often said that if you have to die on stocks and shares you will have to estimate with retirement calculators. With rental properties, you do not have to guess when you die because cash flow comes every month.
Even Robert Kiyosaki, a magnate who believes that people should buy ‘investment properties’ to earn monthly, as opposed to property to live in, believes that the key is multiple properties. He espouses ‘buying properties for nothing’ and using the power of equity to drive infinite returns. Literally it does not mean ‘nothing’ but of course at an abysmal cost. “For an apartment, look for one in an area where with good job growth,” says his partner Ken McElroy. Then identify operationally underperforming properties with value add ability. Once the value of the property gets increased, they refinance the property, pay back all the investors and redeploy the money into a new property. Effectively, they get the property for free because they are using equity from their other property to purchase it. Because of the increasing operating income of the previous property, they continue to realise cash flow.
All this may sound a bit uphill to you, however, we hope the guidance provided will help you feel your way in as you start to understand it better. Not all us can be a Robert Kiyosaki, but we can definitely hope to retire on rent, if we start planning early. And oh, btw, its never too early ;)
Happy retirement planning!