13 Nov 2008

Investment Plan 2

The Plan:
Buy a house somewhere in Navi Mumbai/Thane/ Vashi/ Panvel which has lower land rate in Mumbai. Currently its in the range of 3500-6100 PSF .

Soaring land rates:
Navi Mumbai has seen a lot of action in the past 1 year. The property prices in Kharghar, Belapur, Vashi etc. are touching new heights. The Palm Beach road is getting busier by the day and the Malls and large revocations in DAKC and other IT Parks has seen a surge in Corporate Population. There is surely potential in these locations. Airoli is the next hot spot with a lot of action in Commercial and Retail. Average Rates Rs.2000/- to Rs.4500/- PSF. Outlook Bright Future with Maha Mumbai and SEZs and Airport planned out, it may be a beneficial to invest now in select projects.

Initital assumptions:
Supposing you need at least 1BHK tp start with of say 500-600 SF area, It will come somewhere in 30 -40 Lacs

Initial finance will be taking home loans. Today SBI offers Home loans at 11.5% for 25 years upto some 50-60 lacs. Take it on fixed rate and not floating rate.

Rough Calculations:

The EMI for 40lacs will be

EMI = 3000000/(12*25) (Home loan for 25 years)
= 10000 (Per month excluding interest)

Option 1
If you give the room for rent , you will get at least 7-10 K per month. Supposing you get 10k on an average,
10000*12 = 120000 which t will cover your EMI.

Option 2
Staying in the house. A house in Mumbai means all expenses cut down. You can stay as long as you are in Mumbai, its your own house anyway. When u plan to move out of Mumbai; make sure not to keep the room idle .Give it on rent ,if the home is less than 4 years of possession or sell it if its more than 4 years of possession. The amount you can fetch is around 4 to 5 times the original price in 4 years time (believe me) i.e you will get around15 lacs after 4/5 years time.


1) A home of your own eventually
2) EMI covered by rent (if rented)
3) No need to nvest (10k per month for a year is 1.2 lacs, no need to show investment for 25 years)
4) Sell at 4/5 times its original price after 5 years
5) Interest rates at 11% now
6) Expenditure will be less if you are staying in the house
7) Family oriented, cozy home feeling

1) Property tax, society tax payable one time per annum
2) A pain to take 30lacs home loan
3) May have to spend more if rented intially
4) Have to go to a broker to lease out the room if you are going to rent it out

So try your luck. Think about it and give a go. Please do not held me responsible for anything. This is in exception to market risk and market rates known to me. The land rates, interest rates and space area may differ from actual plan. Please read the property and loan papers carefully before investing or going for a loan.


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