If we buy a house and give it for rent, Is it reasonable to increase the rent by near inflation rate every year?

POSTED BY anon smith ON August 20, 2012 9:26 am ONE COMMENT

I think I already made it obvious from the question about my lack of knowledge about real estate. Please excuse the ignorance! Feel free to make corrections in my assumptions as needed.

Assumptions:

1. Giving a house for rent in a metropolitan city, busy area – like hyderabad or bangalore

2. Better chances to increase rent for independent house/villa when compared to apartments.

3. It should be okay to get tenants willing to tolerate the increments and paying 35-45K monthly in present times should look reasonable (perhaps a 3 BHK house for 5-6 students or a 4BHK house for 7-8 students – fresh graduates like me starting to work in IT companies).   

btw, How much does a typical house cost to get a rent of around 5L p.a (around 35-45K rent per month) in such areas? any estimates/ball park figures? I am planning for the rent to cover almost all of the EMI in the first 10-15 years after paying the necessary from my bank balance. 

I believe that the rent far outweighs FD interest rates(on the money used instead for buying a house) after 8-9 years and can also be used for post-retirement.  

 

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