Of all investments, do you know the investments in flat will give the highest returns? Where you agree or disagree, this is true. There are many options to invest like investing in gold or mutual funds or fixed deposits. But investment in flats would return the highest profit. Therefore, it is regarded as the best form of investment.
Many argue that invest in a plot is a better choice compared to investing in a flat. But, it is not true. For example, consider the price of a small flat to be Rs 40 lakh. To buy it, initially the down payment would be Rs 8 lakh, 20 per cent of the flat’s value. The bank advances Rs 32 lakh towards loan. The tenure would be at least 20 years. The loan carries an interest of more or less 7 per cent. If inflation of 6% prevalent in the country is taken into consideration, if we deduct the inflation of 6% from the 7% rate of interest, the first year we will be paying only 1% interest. If the inflation rate were to be the same next year too, the interest will be deducted.
On a loan of Rs 32 lakh, the interest works out to be about Rs 24000 per month. If the house is let out, revenue in the form of rent will be at least Rs 10,000 per month. Moreover, employees can avail income-tax concessions. If every thing is taken into consideration and a balance sheet is drawn, the outflow from the pocket would not be that great. After some years, the house will repay the loan. Often house owners would say that they bought it for Rs 40 lakh. It is not true. In fact, they paid only 20% of the cost. The rest of the amount was borne by the bank.
Therefore, those who anticipate good returns on their investment should invest only in flat. For example, in 1994, Jana Priya real estate firm sold a 600-sft flat in Madhapur at Rs 1.18 lakh. The buyers, initially paid only Rs 18,000. The rest of the amount was paid through bank loans. The EMI paid was only Rs 1800, which is less than the house rent in the city at that time. Thus, the house itself repaid the loan. Now, the market value of the flat is Rs 20 lakh. Whatever is the cost of the flat – Rs 20 lakh or Rs 30 lakh –there will be guaranteed appreciation.
Investments in shares and mutual funds are subject to market fluctuations. But investments made in flats are going to be appreciated and would never depreciate at all. Therefore, it is always advisable to invest in flats eve by taking loans.
