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Comparing Rental Income: A Deep Dive into Real Estate vs. Other Investment

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  Let's revisit the example of Ram from the previous chapter. Typically, experts advise against investing in real estate due to comparatively lower returns and higher risks when compared to other investment options like equity or mutual funds. Let's delve into the details. Ram has an initial capital to either buy an apartment in Bangalore and rent it out or invest in a fixed deposit. He's in a dilemma, as there's widespread advice to invest in real estate for a more stable income. Ram is uncertain about what would be the best investment.   If he decides to buy an apartment and rent it out, he'll incur expenses like a mortgage loan at 8% interest. Considering he falls under the 30% tax slab, there will be deductions on rental income, and maintenance costs will be subtracted from the rental. On the income side, he will receive monthly rent, which can be redirected to other investments, and the apartment may appreciate in market value Own Contribution: ₹16,15,995

Own House vs. Rental: Navigating the Real Estate Maze of Investing, Profits, and Pitfalls

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Buying land or apartment has always seemed like a safe bet for many Indians. We often hear stories from our neighbors about buying a piece of land for a small amount years ago and selling it for a much bigger sum. The problem is most of us don't really understand how this whole real estate investment thing works. It's like a mystery because no one has really taught us about it, especially when it comes to the details.   Let's take a practical example to grasp how it works in real life. Imagine investing your savings in an apartment and exploring what you could potentially gain after 30 years, right around the time you might be thinking about retirement. Let's explore a couple of scenarios for purchasing an apartment. One involves it being a place to live, and the other scenario focuses on using it as an investment for rental income.   Mr. Ram purchased a 2-bedroom apartment in Bangalore in 2014 for his residence, and here is the initial breakdown of his investme