Analysis of real estate as an investment opportunity. The key evaluation criteria for investment in residential/commercial property in India are analyzed as below:
- Typically, leasing residential and commercial property in Pune could fetch a pre-tax return of 6-9% and 8-11% respectively. Capital appreciation, if any, would provide additional return on investment.
- Investment in real estate in India typically carries an entry load of 10-15% towards stamp duty, registration, brokerage etc.
- Real estate as an asset is not as liquid as investment in stock market, bank deposits etc.
- A power of attorney to a trusted friend/ relative/ professional would obviate the need of physical presence for legal formalities.
- Loans can be raised conveniently in India and abroad for investment in property.
- Loans can be raised in India by the owner and third parties against the security of the property for any bonafide purpose.
- Tax benefit is available on interest on housing loan raised in India.
- Tax exemption is available on re-investment of sale proceeds of property in eligible avenues.
The key considerations (from the perspective of real estate as an investment) to be borne in mind while selecting a specific property are:
- The prevailing lease rentals and scope for capital appreciation in the area where the property is located.
- Scope for infrastructure development around the property under consideration.
- Location and proximity to schools, hospitals, markets, public transportation etc.
- Actual property taxes to be paid.
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