Need advice for 1st deal

[Nikhil Vaidya]

Hello Guys,

I am from Pune, India and I am new in Real estate investment but I am excited to be here in BP and enhance my skill in this field.

With all my skills learned from BP, I have identified 2 properties in my city, brief information about both of the properties is mentioned below.
I am planning to purchase this property with 2 purpose in mind, for next 6 - 8 years ( or more then that) I'll put this property on rent and after that I may stay there or I may not ( may relocate to another city, Nagpur).

First Property

• Located in an area which is developing rapidly as it is near to a big software SEZ.
• Located around 30 km away from my current apartment.
• Currently property is under construction and expected to be completed within a year.
• Property area is approximately 950 sq ft and current rate in that location is 5200 per sq ft.
• Builder is asking for INR. 52,00,000 for this property.
• I have offered INR. 45,00,000.
• Expected rent is around INR. 12000 to 13000 month.

Second property

• Located in an area which is also developing but not as fast as compare to 1st.
• Located near to emerging Software SEZ and education hub (15 collages will be operation in coming 5-6 yrs).
• Located around 6 km away from my house.
• Currently building is under construction and expected to be completed within 1.5 year.
• Area of this property is around 1170 sq ft and rate is 3350 per sq ft.
• Builder is asking for INR. 45,00,000 and not ready to negotiate.
• Expected rent is around INR. 10,000 to 12,000 per month.

My current house is not owned by me but still the time I am staying there, I don’t have to pay rent there.

I am little bit confused which property I should buy and reason for this is after 5 - 6 year I may be staying there. With first property I have few advantages like
• Locality is very good.
• All my friends are staying in nearby location, so it is kind of comfort staying with friends.
• With my offer I will be earning a profit of around 15 % on property value.

Few disadvantages as well,
• Area is small as compare to 2nd property (950 sq. ft. Vs 1170 sq. ft.).
• Property rates are already high in this area( out of range of common man), might face problems while reselling it. Whereas with 2nd property it is upcoming market and rates are low at this stage.

Please suggest me which one I should buy. With your comments and opinions, I am sure I will learn some thing new.

[Dev Horn]

Greetings from the U.S., Nikhil Vaidya!

It will be a challenge for most of us to evaluate deals over there, not just because it's India but most of us buy single family homes in distressed condition. Your deals on these apartments under construction are very different from the typical investor deal here.

However, I know a little about Pune and it is definitely a growing area. Check out this recent article entitled "Pune, India: The World's Next Great Tech City?" - http://mashable.com/2013/05/29/pune-tech-hub/

As long as you can purchase rental property that is a "good deal" on the selling price and can be rented with positive cash flow as Nuhan suggests, you could see considerable appreciation there in the next few years.

Wishing you much success!