Manisha Kumar is stuck with her investments. She is in her
early 40s and works for a bank. The lure of getting loans easily and at good
rates has led her to invest in not one or two, but three houses. She lives in a
flat with her family, and has also invested in a smaller flat. A few years ago,
she booked another flat in the outskirts of the city. It is the third flat that
is causing her heartburn now, as it is lying vacant and earning no income.
Should she sell it?
Kumar should know that too much of something can be bad in
the long run. Property is not the best investment option, since it involves
large amounts of money and comes with the risk of time and cost overruns.
Paying too much EMI will also leave too little for building other assets that
can diversify the portfolio. The only advantage Manisha has is her age. If she
gives herself the next 10 years to rebuild her wealth, she will be able to
recoup the cost of selling the third flat at a loss. She will be able to recoup
the cost of selling the third flat at a loss. She will also be able to unlock
the money that is sunk in the flat, and deploy it in financial assets like
equity, which have the potential of appreciating over the long run. Freedom
from EMIs will also enable her to start SIPs to augment her savings.
Liquidating an asset at a loss is a tough choice to make,
especially when ideas about recovery are ever present. Kumar should only focus on the fact that the
asset is not earning anything for her, and that it might prove to be difficult
to sell in parts, if the need arises. In the interest of higher financial
flexibility, access when needed, ability to take a loan against the asset
during an emergency, and ease of transacting for a fair price, she should
liquidate at a loss and channel her money into other assets. The presence of a
black market, and the legal and tax issues involved, and the paperwork, make
real estate a sub-optimal choice, especially for someone like Kumar, who
already owns two properties.
The content on this page is courtesy Centre for Investment
Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and
Labdhi Mehta.
Read more at:
This comment has been removed by the author.
ReplyDeleteCodename five rings Major location Project Sarjapour raod Bangalore
ReplyDeleteWonderful post.This is nice post and gives in depth information. I like to read this post because I met so many new facts about it actually. Thanks a lot. Luxury Flats In Siddharth Vihar, Ghaziabad.
ReplyDeleteTata Goup partner Mr. Santhanan Krishnan is the Founder and Managing Partner and Mr. Brotin Banerjee is the Managing Director and Chief Executive of this company. Well architecture of this residential project mind blowing Designed
ReplyDeleteTata Housing Serein
Following to this Ajmera Infrastructure has come with their upcoming project Ajmera Lugaano, is superb as compare to other builder’s project and located at Yelahanka which is major location of Bangalore city. Ajmera Lugaano
ReplyDeleteMajor institutions and IT companies are nearby Prestige Park Square. This is mega launch from Prestige group in east Bangalore.
ReplyDeleteMany people relocate to themselves because of uncountable opportunities and development. Although city has many other residential projects but Kalpataru Group is the one, which has numerous facilities in a pack of better comfort. Development of Kalpataru Greater Noida will leave positive impact on the city and city people.
ReplyDeleteGodrej Sector 79 Noida here are some offered luxuries in the form of spacious bedroom, glass partition in living room and dining room, 24 hours water and power supply, 24X7 security on checkpoint, modular kitchen, featured fitting bathroom fixtures, wooden and marble flooring, gated complex, jogging track, parks and garden for kid entertainment.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteAwesome blog.I have also some information about a new real estate project in Bangalore.Provident Devanahalli
ReplyDeleteBest information sharing for the real estate investors.
ReplyDeleteLuxury Apartments in Chennai
Thanks for sharing the information.visit@http://www.bramhacorp.in/vantage-commercial/index.php
ReplyDeleteGreat post. This helps me to know why investing in real estate is the best choice. Follow this link to know more Apartments in Chennai
ReplyDeleteThis equates to an annual passive income of up to $18 000 per annum which easily beats returns from fixed deposits and also outperforms dividend returns from stocks. dairy farm residences
ReplyDeleteThanks for sharing the blog it is very important and interesting topic in which peoples are receiving great information and very helpful in the real estate.
ReplyDeleteList of builders in Chennai
There are plenty of dissertation web pages internet as you're get hold of of course revealed in the web-site. gibraltar property
ReplyDeleteI learn some new stuff from it too, thanks for sharing your information. investment opportunities in cambodia
ReplyDelete