Investing in 2nd property (Residential plot )

POSTED BY Ranganath ON June 19, 2013 12:45 pm COMMENTS (5)

Hi,

  I’ve bought a flat in Bangalore 3 years ago with loan amount of 30 lakhs for a period of 15 years @10.5% rate of interest. 

  I made a partial prepayment of Rs 4 Lakhs in the last year in 2 instalments. So the outstanding loan amount as of now is approx 22 Lakhs.

 I do have a surplus amount which can further reduce the principal loan amount but after going through the posts in your forum, I have decided not to prepay the amount anymore

 Now my query is Can I invest this amount in another property ( small residential plot ) in my native city (Belgaum)?

1) Is it a good idea to invest in the property again?

2) What are the other avenues where I can invest the amount so that I can get a return of 10% or more annually ?

3) My investment horizon is for 3-5 years

4) I am already invested in equities (and on marginal loss). Also adequately covered with insurance. so dont want to invest here

5) Do not want to invest in Gold/Silver or jewellery

Please advice

Thanks

 

 

 

 

5 replies on this article “Investing in 2nd property (Residential plot )”

  1. Dear Ranganath, wd you decide your destination before catching a Train or after getting in it?

    Please decide & do tell me?

    Thanks

    Ashal

  2. Dear Ranganath, Please tell me what I should understand from your reply –

    Quote –

    “I am very much aware of the tax implications, and am not looking for selling the property in next 5 years(If at all I decide to buy now). I am looking @ 3-5 years as investment horizon which can fetch me decent returns.”

    Unquote – if you are not looking to sell your property, how can you book profits? I’m unable to understand.

    Thanks

    Ashal

    1. Ranganath says:

      Ashal you have got a valid question.

      Generally we buy and do not think of selling it. We just enlighten ourselves with how much it has appreciated after few years and keep it with ourselves expecting it to appreciate further more.

      If I could buy now and hold it for 3-5 years, there are 2 possibilities..

      1) I could use it for my own usage ( Construct a house) (probability is low as I already own one)
      2) Rent it out (After construction)

      Considering the appreciation of the land in next 3-5 years, I would be able to save on the initial investment on land when I buy it then

      That’s my whole idea behind investing in the plot.
      I would sell it in a worst case scenario.

      Having said that I want to know from you all if it makes sense to invest in 2nd property or is there any better avenues

      Thanks
      Ranganath

  3. Dear Ranganath, personally i w;d like to invest my money in Eq. alone. I’m not sure for your situation that are you aware or not for tax liability on the gains if any for 3-5Y period from Real estate.

    Thanks

    Ashal

    1. Ranganath says:

      Dear Ashal,

      Thanks for the response.

      I am very much aware of the tax implications, and am not looking for selling the property in next 5 years(If at all I decide to buy now). I am looking @ 3-5 years as investment horizon which can fetch me decent returns.

      Coming back to the equities, I am a not a big fan of bourses and do not track the market closely due to lack of time. I do have some percentage of my portfolio in equities as well as mutual funds. I prefer to put in PPF rather than equities these days.

      But having said that PPF allows you to deposit max 1 lakh per year

      Hence I want your suggestions/opinion to help me in deciding whether investing in 2nd property is a good idea or not.

      Thanks
      Ranganath

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