By Petronus Realty
We sell property, so treat what follows accordingly. But a buyer who understands what they are getting into complains less and refers more, and the honest case for real estate is strong enough that it does not need overselling.
What property genuinely does well
The real argument for property is leverage on an appreciating asset you can also use. A home loan lets you control an asset worth several times your deposit, at an interest rate lower than almost any other secured borrowing available to an individual. If the asset appreciates at even a modest rate, the return on the money you actually put in is considerably higher than the headline appreciation.
Add a rental income that tends to rise with inflation, tax treatment that allows interest and depreciation to be set against that income, and the fact that you can live in the thing, and you have an asset class with properties nothing else quite matches.
The costs that never make the brochure
- Stamp duty and registration, which in West Bengal runs to several percent of the consideration and is payable in cash, not from the loan.
- GST on under-construction purchases, not applicable on ready flats with a completion certificate.
- Maintenance, typically quoted per square foot per month and rising faster than most buyers model.
- Vacancy between tenants — budget a month a year and you will usually be close.
- Brokerage on exit, and the cost of the repairs a buyer's survey turns up.
Run your expected return with those included. A yield that looked like six percent gross is frequently closer to three and a half net, and that is the number to compare against anything else you might do with the money.
Who should not buy
If there is a realistic chance you will need the capital back within five years, property is the wrong instrument. Selling takes months in a good market and longer in a soft one, the transaction costs are front-loaded, and you cannot sell a third of a flat to cover an emergency. If your job or city is likely to change inside three years, rent.
And if the purchase only works on the assumption of a particular appreciation rate, it does not work. Appreciation is the upside, not the plan.
Tell us your horizon and what the money is for, and we will say plainly whether we think buying is the right move. Sometimes the answer is to wait.