33.41 Importance of Pricing in Real Estate - Case Study

Do you know why there is such a varying viewpoint on Real Estate?

Some are completely pro: You can make a lot of returns in Real Estate, yes.
Some are completely against it: All your money could be wiped out in this market, also correct.

Why such contrasting points?

Because just like any asset class:

We hear stories of people calling the Stock Market a scam.

All because they put all their wealth based on tips.
And lost it all.

Does that make the asset class bad?
NO.

Similarly in Real Estate:

As important as it is to get a good property,
The price you get it at is EXTREMELY IMPORTANT.

I could flat-out tell you that you should not go for apartments.

But if you get a distressed sale at a great price,
You should absolutely go for it.

I can tell you that Goa is an amazing market.

But if you go for a property through a builder at 2x the price,
You are doomed from the get-go.

For eg:

This was a 3 BHK Villa that is being sold at 5-6Cr valuation through Fractional Investing.

Price per sq m: 3 Lakhs

**
How do you make smart decisions around pricing?**

Understand what your per square meter rate is on average for the zone you are buying at.

Critical takeaways are to study the area of your investment and check for:

Clear arbitrage

When buying a property your preference should be:

Price of the property > Asset Price Appreciation > Yield

Let’s conclude by taking an example:

A developer in Gurgaon was selling an apartment at 11 crores (average).

And how much rent are these properties making?

2L per month.
24L per year.

If you check the rental yield,
It is just 2.1%.

These are very poor numbers.

If you decide to buy such assets, you are harming your portfolio.

Real Estate as an Asset Class is not bad.
It’s up to you to make smart decisions with your money.

Learn, Apply, and Grow Your Wealth.

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