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Arranging house to rent

Discussion in 'Money Matters' started by sanarthi, Jun 16, 2015.

  1. sanarthi

    sanarthi Silver IL'ite

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    Hi All,

    I am a working mom. My husband plans to build a 3 -4 row houses for renting purpose in his home town ( Sivakasi - in South India). Budget arrived at 35 - 40 for 3 houses.

    Rent might be 4000 / house. So over all 12000 incase we build houses.

    But i am little hesitant about this. investing 40 L ( 10L on hand, 30 L Loan) and reaping only 12000 is what i dont like. Rather if 40L is put in FD, the 8% interest would be 26000 minus tax 7800 would amount to 18000 ;
    moreover we will have 40L on hand too. And the interest 26K would add to principal.

    But my husband argues that we reap 12K and interest is just 18K . So only 6K is the difference. But that will be a regular income. We cannot maintain 40L on hand, we will surely spend.. My point here is rent reaped will be used to pay EMI for 30L. So no point here for first 3 yrs, until we complete the EMI.

    My husband wanted to generate a 3rd income ( Reasonable amount) as later days if i need to quit job for children or for my husband's career, we can have a regular income.

    Please advice me.. Is investing in FD good decision or shall we bulid houses for rent..
     
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  2. harinimadan

    harinimadan New IL'ite

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    Your husbands idea of investing in realty is a very good idea as appreciation of land prices over the long-run is certainly realistic.These days inflation is much higher than the rate of interest on fixed deposits,that doesn't make FD a viable investment option.You also get to save a little tax on the interest paid towards home loan.

    But then the city should have huge potential in terms of real estate investment.I don't have much of an idea where and how this place sivakasi is(only heard of firecrackers from this place). I think you guys would better know it as it is your hometown.

    Good Luck:)
     
  3. sanarthi

    sanarthi Silver IL'ite

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    Thanks Harinimadan. Sivakasi's real estate is booming and Sivakasi is labour area, where you will have lot of small business in and around supporting printing , fireworks etc., So it is good to buy a land.But my question is will building houses for rent purpose worth or RD/FD work. Thanks for your reply.
     

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