Lease property for Bank Branch – Questions on Loan, Return and Tax

POSTED BY MPMumbai ON October 15, 2014 11:35 am NO COMMENTS

Hi Friends,

Need some advice from investment return, loan and tax prospective.

I am NRI. There is commercial property in Mumbai where MOU signed between Bank & Builder to use the space for upcoming bank branch. (Expected readiness time : Jan 2015). Lockin Period is 9 year with every 3 year 15% interest.

Property cost is 2.25 cr. + stamping + registration (May be parking)

I plan to invest 1.10 cr. and plan to take commercial property loan for remaining amount. (1.15 cr).

Monthly rent ~85K (Before TDS) & property tax will be covered by bank. With 9 year lockin period, expected Rent around 1.15 Cr

Bank Loan will cost around 13% interest. I plan to sell one of my other property in few year (2-5) and pay back 80% of loan. Till that time, entire rent plus 35K EMI will go to bank to pay the loan.

Now my question is

Is this good investment which produces fixed white income & gives capital gain over a number of years?

With high bank interest rate, Is buying commercial property with such loan make sense is good investment?

In commercial market, there is not much momentum in last 5-7 years in mumbai and getting into it will give any good return specially with Amazon, Flipkart coming in picture?

Do you recommend any specific bank for reduced rate interest?

How much Tax I should consider with Rent and how complicated is to take money back to Original country (in $)?

Thanks!

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