Sunday, 16 September 2012

Mumbai Real Estate

The average rate of property in Mumbai suburbs is 10 Million rupees. So how the financial numbers work to get one such property.
1. Required Annual income = 2 million rupees ( 20,00,000/-) i.e monthly Rs 1,65,000/-
2. Loan provided by Bank 75% of property value = 7.5 million rupees (75,00,000/-)
3. You need to shell out from savings (if you possess) = 2.5 million rupees (25,00,000/-)
3. Monthly EMI = Rs 83,000/- for 20 yrs.
4. Amount paid over 20 yrs to bank = 19.92 million rupees (1,99,20,000/-)

So to buy property worth 10 million one pays 19.92 million rupees. Does this make financial sense plus consider all uneven things that can happen in due course of 20 yrs??

Instead of buying property if one stays in rented house, the benefits...??

1. Rs 2.5 million of initial investment if invested in secured government bonds for 20 years gives Rs 11 million in return.
2. Rental expense with 10% hike every year is Rs 17.18 million for same property, still Rs 2.74 million less than loan amount to be repaid for 20 yrs.If this 2.74 million rupees amount is invested in secured government bonds over 20 yrs it gives you Rs 11.15 million.
3. Maintenance cost of property over 20 years Rs 1.5 million
4. Property tax over 20 yrs Rs 0.6 million (with 2012 rate)
5. Total saving generated from renting property is Rs 24.27 million over 20 yrs
6. The most important thing renting gives flexibility to change cities/localities as per requirement of job/schools for children and many more.

Buying property at least in Mumbai has no rational. And how many people have annual income of 20,00,000/- in Mumbai...????

Saturday, 15 September 2012

Investing in India

Investing in India...what you should know......

1. Huge Population & natural demand
2. Large untapped market
3. Highest percentage of young population
4. Saving rate of 30% to 40%
5. People buy premium stuff to impress others
6. Population in rural areas possess money but lack avenues to spend
7. Rampant corruption acorss all levels
8. All cities/towns/villages are full of filth & dirt
9. Infrastructure is in pathetic condition
10. Politicians, local goons & unions demand security money from every business
11. Decision making in painstakingly slow
12. Patience is the biggest character all companies need to posses while operating
13. Cheating is very common
14. Opening new business/factory/outlet/warehouse is full of hurdles
15. Even after so many good & bad things country is still growing rapidly