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