property returns

Real Estate assets or properties can be broadly classified in three categories, first is SELF OCCUPIED, Which could be the place of our living or of our business and second is INVESTED properties (for future returns) and third is INHERITED/LEGACY.

Self occupied properties generally are the luckiest and happiest ones, because they get all the care and the other two categories Invested/inherited/legacy generally are not so lucky. Most of us reading this own a REALITY ASSET (Lets not talk area, worth or utility, self acquired or inherited) and this is really GREAT!!

But are we really 100% happy, comfortable and secure about the ownership we have?

We are going to discuss more about second category of properties which are self acquired with futuristic returns in mind.

Having property is a virtue but not able to fully manage them can become frustrating and saddening. The sense of security and pride prevails in our mind and we are vocal about it also, but simultaneously the concerns relating to protection, management and proper upkeep also travel through our thoughts.

Most of the times due to compulsions of busyness, people brush aside these concerns or delay their decisions which affect their assets and Alas!! The property doesn’t respond and produce as per desires. The degree of this involvement varies from property types (self occupied to inherited ones) and depending on the degree involvement or avoidance people take decisions. The assets which made them proud turns into a LIABILITY and then they look forward to exchange this liability with another ASSET!!

At Assets Mantra we come across many clients who get into this cycle. The property they acquired with certain plans goes for sale!! ASK THEM WHY?

Answer is because things couldn’t work out the way they wanted, because they could not manage to get the things done, because they don’t have time, because they have better options.

So our experience tells that 90% times people don’t have better options, they want to try it out with other property!!!  When we ask them did you get the kind of returns you were expecting? Rarely somebody would say yes. The reason for this is either them or the property had been “dormant” or “in active”.

The good part about investing in real estate is that in 99% cases where you have ownership and possession of asset, it would give you positive returns (unless there has been fraud or similar issues or you have acquired it at more than prevailing market rate) and this justifies the THUMB RULE we Indians believe in “Buy now and sell later-it definitely would bring returns” but the Big question is are the returns really GOOD?? Do we make calculation of return??

And when we discuss the return calculation (Not only refer to financial return at the end but also the returns it gave or could have given you when it was with owner) people feel the property could have done much better had it been handled in a better way.

We at Assets Mantra believe that investing in property has to be very analytical and this should include not only the final return from property but also how actively productive it says during your possession. There are four basic questions we ask our clients?

  1. Why do you want to invest in a property?
  2. What is the time horizon you have for the expected returns?
  3. How you want the returns to participate in your life’s financial planning?
  4. How do you plan to manage the property?

Most of the people are clear about first question but for later three questions they have very vague ideas. We suggest everybody that when you plan to own a property you should also have a definite plan on how to manage it because buying property involves big financial commitments and hence the opportunity cost has to balanced. The professional services at Assets Mantra aim to provide answers to these last three questions. We offer property management, property development and liasioning services.

*If you like the article or want to discuss, please mail to our director at dhruv.garg@assetsmantra.com