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Real Estate Vs Equity investment

Discussion in 'Real estate Investment' started by real_buzz, Oct 12, 2011.

  1. real_buzz Moderator

    I was going through a article where the author had compared real estate investment Vs investment in equity. In India, i think most of the people will vote for real estate property. But when i went through that article, i realized that equity investment is far better than real estate investment.

    In that article, they have compared the returns generated by a prime locality land in Mumbai and the returns generated by BSE over the same number of years.

    Returns generated by BSE are much higher than investment in real estate. I am not trying to say that investment in real estate is not good but looking at the current scenario, where you don’t know if you are going to get the possession of the property on time or not, rising interest rates which increase the overall cost significantly and the maintenance cost of a property over that time.

    If we sell real estate property intraday or short term, I am quite sure that the chances of loss in real estate are same as equity. But as we trade in equity and invest in real for long term therefore in general the returns generated by real estate are higher than equity trading.

    Real estate management is tough; there are so many formalities and processes which need not only time, but money as well. On the other hand, investing in equity in today’s world is far easier. Equity investment can be done online with minimal efforts and this does not involve any significant cost in comparison of the cost associated with real estate.

    One more thing is important, and that is our perception towards real estate. And due to extremely emotional and good perception about it, we tend to ignore the side effects of investing in real estate. For example, if you purchase a flat worth 30 lacs and go for home loan of 80 per cent for a tenure of 18-20 years. You would be paying around 15 lacs in interest.

    So the actual cost will become close 45 lacs + stamp+ etc. where as at the time of calculating, most of us will talk about only the cost of that flat excluding other things.
    Any thoughts on this?
  2. deemed New Member

    well, at times we are carried away and due the tangibleness of the real estate asset, we tend to prefer it more than equity but i think as you mentioned, we often do not include interest on the property and additional cost. And if a property is sold within five years, then there won't be big gains on that except few locations in the country where property rates have almost doubled.
  3. liyans Member

  4. MichaelPaish New Member

    From the perspective of investment, how is the is current real estate market doing in Bengaluru?
    Is it currently a buyers or a sellers market? What are the prospects of price appreciation over the next 5 years? Any areas that are likely to appreciate better?
  5. Raja Simha New Member

    With the advent of tech, every sector has taken an advantage, and Real Estate is no exception.

    If you are thinking traditional real estate is not for you, check out REITS and Real Estate crowdfunding platforms.

    Now a days, you can invest low ticket prices in to premium properties with low risk yet yielding high capital gains. You can expect up to 21% IRR investing in real estate.

    With the help of a right crowdfunding platform and their management, investments have also become hassle-free unlike the past.

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