Summary of "How to invest in Real estate? |ft. @rk.ravikewalramani Indian Business Podcast"

Summary of "How to invest in Real estate? | ft. @rk.ravikewalramani Indian Business Podcast"

Main Financial Strategies, Market Analyses, and Business Trends

  1. Mumbai Real Estate Overview:
    • Mumbai is one of the most expensive real estate markets globally, with prime locations like Altamount Road costing more per square foot than Manhattan.
    • The high prices are driven by limited supply, extremely high demand from wealthy, established buyers, and the prestige associated with certain localities.
    • Mumbai’s real estate market is saturated, especially in South Mumbai and prime suburbs like Bandra and Andheri.
  2. Mumbai vs Navi Mumbai vs Mumbai 3.0:
    • Mumbai: Original city with linear growth, highly saturated, expensive, and limited land parcels.
    • Navi Mumbai: A planned city developed over 25-30 years, with better infrastructure and amenities, still growing but nearing saturation.
    • Mumbai 3.0: Emerging area beyond Navi Mumbai, largely agricultural land now targeted for development, akin to Mumbai’s 1970s-80s stage. Offers the most affordable entry point (land parcels for 10-25 lakh rupees) but requires long-term patience (2-3 decades) and carries some risk due to changing government policies and potential scams.
  3. Investment Parameters:
    • Rental Yield: Residential properties in Mumbai yield 2-3% annually on long-term leases; commercial properties yield around 6%.
    • Capital Appreciation: Real estate is a long-term game; realistic appreciation expectations are about 10% per annum.
    • Short-term Rentals: Airbnb-like short-term rentals exist in Mumbai, offering 4-8% rental yield depending on location and property type.
  4. Choosing the Right Property:
    • Invest in your neighborhood or micro-market where you have local knowledge.
    • Prioritize developers with a strong track record and timely delivery.
    • Verify all legal documents and approvals via the Maharashtra Real Estate Regulatory Authority (RERA) website.
    • Consider location factors: proximity to transport (metro, railway), noise levels, road connectivity, floor level, parking facilities, and amenities.
    • For residential properties, avoid apartments facing metro tracks due to noise.
    • Buildings with multiple amenities sell faster and at better prices than standalone buildings.
  5. Real Estate Investment Methodology / Step-by-Step Guide:
    • Step 1: Define your investment goals: rental income vs. capital appreciation; residential vs. commercial.
    • Step 2: Research the developer’s track record and project history.
    • Step 3: Use RERA to verify project approvals, title certificates, and check for disputes.
    • Step 4: Choose a property in your familiar neighborhood or micro-market.
    • Step 5: For under-construction properties, negotiate payment terms with the developer:
      • Aim for a 10-15% discount by offering upfront payment.
      • Prefer staggered payment plans or subvention schemes (e.g., pay 20% now, 80% on possession).
    • Step 6: Invest preferably in 2BHK or 3BHK apartments for better demand and flipping potential.
    • Step 7: Hold the property until possession to maximize appreciation (potential 50% return in 3-4 years).
    • Step 8: Exit by selling either independently or through the developer’s sales network.
    • Step 9: For flipping dilapidated properties, renovate and stage before resale to realize 10-30% short-term gains.
    • Step 10: For land investment in Mumbai 3.0, ensure legal due diligence and be prepared for long-term holding (20+ years).
  6. Redevelopment Insights:
    • Redevelopment involves demolishing old buildings and constructing new ones, giving existing owners larger, modern apartments.
    • Returns from redevelopment can be significant (e.g., 50%+ increase in space and value).
    • Not all buildings qualify for redevelopment; feasibility depends on developer’s profit margins and legal regulations.
    • Redevelopment is a complex process involving multiple stakeholders and can take years.
    • Many Mumbai residents buy properties hoping for redevelopment, but it is not guaranteed.
  7. Slum Redevelopment:
    • Slum rehabilitation is ongoing but slow; expected to take decades.
    • Developers build vertical apartments with basic amenities for slum dwellers and use the freed-up land for commercial/residential projects.
    • Government policies have improved but challenges remain.
  8. Infrastructure and Growth Drivers:
    • Key infrastructural developments (e.g., metro stations, entry/exit points of trans-harbor link roads, and Atal Setu) are prime indicators for future real estate appreciation.
    • Following government spending and development plans is crucial for identifying emerging hotspots.
    • Infrastructure projects often take decades to complete.

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