Should I invest in a potential good property or do SIP in mutual funds ?

POSTED BY e364705 ON January 31, 2014 3:18 pm COMMENTS (5)

Dear,

I want to invest in 1bhk property at Ulwe where the proposed airport and other developments are in progress. The approx. cost of property is Rs.30 lacs. Builder want 20%  in black. i.e. 6 lacs. So the agreement value will be Rs. 24 lacs. My takehome is Rs. 45k/m and investment in mutual fund sip is Rs.15k/m.

Now, if i took home loan of Rs.20 lacs and emi 20k/m @ 10.5 % for 10 years then my total loan paid amt will be around 24 lacs. So total cost will be 24 + 10=34 lacs.

My question is :

1. Should i buy the property ?

2. Or invest in mutual fund sip?

Where will i get appreciation?

5 replies on this article “Should I invest in a potential good property or do SIP in mutual funds ?”

  1. arjunp3000 says:

    Hi e364705,

    Based on Ashish’s response it looks like the airport may or may not be built. This will factor into your risk if you do decide to invest in real estate.

    Investing in real estate also has the additional work of running around and getting your documents in order.

    Where as investing in Mutual Funds has become hassle free. Investors who have invested in Mutual Funds about a year ago are seeing returns of 7 – 9%. Unless the return on investment from real estate is going to beat these numbers, you should consider putting your money in mutual funds.

    Reg,
    Arjun
    FundsIndia.com

  2. divya.advisor says:

    If you are convinced the airport is certain to come up rel estate will give you much bigger returns.

  3. Ashish Garg says:

    Dear e364705,

    Ulwe is surely an upcoming location, with work on added harbour line track and future airport, the looks good as an investment option. But before investing, also check out the rental yield (since you are looking at investment point of view).

    Coming back to your calculations, if you take a loan of 20L at 10.5% for 10 yrs, your EMI would be around 27K and not 20K. Therefore over a period of 10 yrs, your actual payout would be about Rs.32.50 L. So total cost would be Rs.42.5L.

    As suggested above if you do not own any property, and if you are looking at this house for your own use, you may still consider this location. Navi Mumbai is growing fast and with better connectivity, this location could be a fairly good investment option. As for the new airport, we all have been hearing for over 7-8 yrs or may be more than that.

    Ashish Garg

  4. Lokesh Jain says:

    Hi e364705,

    Investing in each asset class would depend on your risk appetite. Though property is a stable asset class, it would depend on your term horizon of investment. It seems as you are taking loan, your investment horizon is long. But then i would recommend investing in property only if you don;t have one. If you already have a home, dont go for second home investing so soon.

    At this take home salary, look for investing in other products viz. insurance, SIPs, PPF etc.

    Thanks,

    Lokesh Jain (LJ)

  5. ashalanshu says:

    Dear e364705, what ‘ll you do if the proposed airport remains merely a proposal or shifted elsewhere? What ‘ll happen to your property price appreciation?

    Thanks

    Ashal

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