Dubai , Dubai · Member since 2015 · 82 posts · 18 votes
Dear Experts
I'll ask the question first and then give the context so if you are not interested you can stop reading here.
Is it a good idea to take a personal loan at 4.74% that I can close in 4 years, and buy a property in Mumbai, India?
I have been listening to the Bigger Pockets Podcasts and reading the information on the forums for over 6 months now. I am feeling that I have reached a point where I must start taking action now.
I currently don't have much cash but I have a job that allows me to save some money every month. I am planning on going for a personal loan here in Dubai, (which is a lot cheaper than even home loan back home in India) and then use that cash to buy small commercial shops in Mumbai. The rental yields are better on shops than residential. And inflation will eventually push the rental income higher. My goal is long term build long-term wealth by having multiple such shops that produce cashflow every month.
Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
10y
Sachin Acharya , RE in Mumbai has been on the rise for a while and some feel the bubble will burst soon.
If you buy these properties well below current market value, you might be ok. My advice is wait on the sidelines and be ready to act by getting the loan when the market takes a down turn.
Rental Property Investor · Sandefjord, Norway · Member since 2015 · 202 posts · 87 votes
10y
Hey Sach,
I think its a cool idea. But just make sure you can cover your payments. 4 years is a short time, and you should have multiple exit plans before you purchase. I wouldn't consider inflation when looking at a 4 year mortgage. The way that inflation helps you out is with you increasing the rent.... you won't be able to do that significantly over 4 years, not to a point where its going to affect your ROI very much anyways.
Other things to consider is that it typically takes longer to find commercial tenants, but they tend to stick around much longer once found. So you should have a buffer to handle your expenses in case you encounter some issues.
If you have a limited amount of funds, I would choose my first deal very carefully. Things usually go most badly with the first deal, so make sure you have good margins to cover your *** when you get going.
Let me know if you wanna do lunch before I leave Dubai. Im happy to give you a pep-talk!
Without knowing any details, I say go for it! Expect to screw up, and know that its something we all do. But even if you screw up, you will most likely get all your money back, and you will have more knowledge for next time. So the downside is not actually that bad. And who knows. You might get it right on the first try too.
You can do it! You have people around you to give you assistance and knowledge, so take the plunge!