33.32 How do you choose the right Real Estate Investment as per your Goals?

• One of the most significant issues in Indian Real Estate is the Opaqueness.
• This leads to inflated Properties being sold to you.
• This means you will see almost no noticeable gains for a long time, and your downside risk will be high, especially if you choose properties that anyone can buy.

So, let's take a deeper look at different subcategories of properties:

1. A Basic Vanilla Flat

• This is likely going to be a bad investment. Why? Because it’s not unique.
• Such flats are sold in bulk. You are probably getting 1 out of 300 apartments. Plus, what happens if a new complex is built near you?
• Your resale gets harder. You will not get buyers for your flat. This type of property works for consumption but not for investment.

For example, I bought a flat as I see multipurpose use with it:

• Office/Studio space
• Holiday Home
• Airbnb during peak seasons
  The ONLY time you can consider a vanilla plain property is if you get it at a great price.

This would typically be a distressed sale. This should be the only reason to buy a plain property.
Price matters a lot. We will cover this in depth soon.

2. High Rise - High-Density Developments

• High-rise high-density means tall apartments, normally complexes. Developers buy a plot of land and build a large number of apartments.
• Builders generally buy townships in metro areas. These have upwards of 5,000 apartments. You are buying one of these. When you buy this, this property will probably be overpriced (as per the sq m concept).

Now, as the project gets older. The price even depreciates. Avoid such Developments,
This is simply because the supply of such properties can be increased very quickly.

3. Low Rise - Low-Density Developments

• This is what you can ideally go for. There are fewer apartments in supply here.
• Your Undivided Share of Land (UDS) would also be better here i.e. more likely that your property appreciates. But again, the deal and price that you get will matter.

4. Unique Properties

These are some of the things to focus on:

• Location
• Type of property (sea-facing, Next to the beach)
• Amenities (Pool)

This will depend on the area you are looking to buy in. The point is to create and leverage your USP.
Learn to buy properties that meet your goal.

1. Consumption Property
   1. Maximum Comfort
   2. Buy in places that you intend to live
2. Yield Based Property
   1. Aim for a rental yield of >4%
   2. Focus on Short Term Rentals to achieve higher yields.
   3. Don't expect such properties in Tier 1 cities like Bangalore, Delhi, and Mumbai.
   4. What are Yield Properties?
      1. Short Term Rentals are allowed forever
      2. Buy at a tourist spot
      3. Big Developers should not affect you if they come to that spot
      4. Figure out management and operating expenses
3. Investment Grade Property
   1. The focus is on property return
4. Tax Saving Properties
   1. For eg: Investing in Dubai for a Golden Visa and Tax Saving
   2. Even if your property doesn't give great returns, your goal might be to save on taxes.

Understand why you are considering Real Estate, and what you expect from your investment.
This will make you 2x more likely to make a good choice as per your needs.

Source

• Akshat Shrivastava 30 days Newsletter.