Real Estate Investment for Rental Income

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Rental Income

RENTAL INCOME has always been one of the most preferred alternative income considered by the large Indian middle class. It is considered as an aspirational GOLD especially when you look at the salaried class approaching its retirement. One of the best ways to secure your retirement is invest in an additional property that can give you rentals when you retire or build another floor to rent it out and provide you that extra security cover. In this article, I am highlighting the pros and cons of investing in Real Estate for Rental Income.

Typically in India  the rental rates vary between 1.5% - 3% of  the current  market value of your residential property  and 7 – 11% of your commercial property.

Pros:

·         It generates regular income month on month

·         It is protected from inflation as it increases with the rise in overall price index

·         It gets you tax benefits (e.g depreciation benefits)

·         It can cover your incremental mortgage costs

·         Your capital is intact and grows over a period as the price of the property goes up.

Cons:

·         It involves high maintenance cost for  the upkeep of  the property

·         Risk of empty units

·         Dead-beat tenants

·         Typical pitfall of the illiquidity of the asset

·         Loans are not very easy to get by for a commercial property.

If you wish to invest in the rented property, do be cognizant of the above factors apart from the other factors highlighted in my earlier articles before you invest. It is advised to express restrain on investing in rented properties against the bank loans. Also ensure that you keep at least six months' worth of reserves on hand in the event you fail to find a renter.

Thank you again for taking out your time and reading this article. Do write back to me with your feedback and if you found this  article helpful.