I am quite sure a lot of us would want to invest in real estate, however it is beyond the means of many.
I agree. However, like most things, there is always another way around. Here's some food for thought. Some people open recurring fixed deposit accounts and say Mr. X invests
5000 in one such scheme which returns approx. 8-9% APR (pre-compounding) per year. Instead or even better along with this, if he decides to save
30,000 and then approach niche land plot developers (usually small town folks who own acres of ancestral farm land which they convert to NA and sell small plots to private investors). I have noticed that in states such as Maharashtra (which I am most familiar with), MP, Rajasthan, Gujrat, Karnataka and Andhra Pradesh, it is relatively easy to find ~1500-2000 sq.ft. plots in the region of
1.2L to 1.5L
The developers need to sell plots to earn and they are not professionals (at least most I interacted with aren't). For this reason they have internal finance schemes in place (0% APR over 48 months is a typical example). Basically all that means is if you pay
25,000 - 30,000 as a down payment, the rest of the amount is divided in 36 monthly installments free of interest. An illustration:
Cost:
1,45,000 for a 1500 sq.ft. NA plot with road access, water and electricity line
Down payment:
25,000
EMI:
2,500/month for 48 months with no penalty for pre-payment
Strategy: If Mr.X can afford
5,000 in a recurring FD per month, he can certainly afford this. So buy such plots instead of FD or as I mentioned earlier, in addition to your FD...try to pre-pay in less than 48 months. You get the land, and as we all know, if location is chosen wisely, returns can be a lot more than 8-9% APR per year as in case of the FD above. Also you pay half the amount you would for FD
r:2,500 instead of
5,000) If possible, save
60,000 and buy 2 such plots for
5,000 per month. Over a period of 10 years for example, one can build a huge amount of capital using this method.
Risk: If you don't find such scheme in your state, having the guts to venture in another state. It can be risky, but then its still a part of India...and with right pre-purchase checks and ensuring all paperwork is legal and the property is well-fenced and monitored at least once every 2 months, one can rest assured that the risk is worth taking.
So I suppose this is an easier way to venture into property investments. Treat small plots of land like FDs, if you can take the plunge, you stand to gain a lot more than FDs and with less risk than investing the same amount in stocks. The only catch is our ability to identify such opportunities and negotiate the right price.
. Otherwise, I will continue with what I am doing. 