For Real Estate investment, does my math make sense?

[jesusismyanchorinthestorm]

@feldon Thank you for responding!

 

[haston]

@mayello You will be very disappointed after 10 years when most buyers offer you a large chunk in cash.

 

[washinigtoncounty2017]

@mayello Income tax rebate will depend on loan interest.

Net Loss = 0.7 * rent - loan interest
Tax rebate = 0.3 * Net Loss

Also for most properties 10 year appreciation will be more than 30% . The is the most important factor in your returns.

 

[mayello]

@washinigtoncounty2017 Thanks for your response and suggestions. I was trying to be conservative, for rental and for appreciation, both. At present, I have found properties being rented out at 38-40K per month in the same society. I have considered only 35K with 7.5% YoY increment (standard here in Bangalore is 10% every 11 months). Also, the property is expected to go to 15-20% in the next 2 years or so (based on the location & upcoming nearby under development projects)

 

[amyanne87]

@mayello Also you haven’t added your interest rate…

 

[mayello]

@amyanne87 It is 8.4%. The Total Investment has that included, missed adding the column. It is ₹8,787,346 for 10 years.

 

[amyanne87]

@mayello Then the cost of acquisition increases again when this you will sale you will incur LTCG which is 30% on appreciation

 

[mayello]

@amyanne87 No, the cost of acquisition already had that added. I simply forgot to add the individual figure.

I plan to forego the LTCG by buying another property from the returns. Because right now, I do not own a home. I might make it a home at a later date, or continue using it for rentals, or sell it off to buy a new home.

 

[amyanne87]

@mayello Oh Yeah I missed that but still pls calculate Irr also for your returns. House over long term gives not more than 10%

 

[mayello]

@amyanne87 Got it. Thanks for your response and suggestions.