thread on Real Estate

[vijayvaliya]

We have discussed at length on this forum on risk management.

We have discussions here on equity, derivatives, debt, foreign exchange, commodities and other money market instruments.

I have not come across any serious discussion on realty as investment option.

May be because amounts involved are very high, so is the risks associated.

May be because we are not sufficiently aware of the opportunities available.

May be because the we are not familiar with the terminologies used in realty business.

I feel it is excellent investment option, given the kind of fabulous returns it provide over a period of time.

This is attempt to demystify the terms associated with realty, also have an open discussion on the real estate market.

To begin with i invite the our wise senior members, to throw light upon terms like FSI, TDR, carpet area, built-up area, super built up area etc.

Is there any way for a small investor (Having a corpus of 1-2 L) to participate in RE market?


I am sure, as we go ahead many of our members will be benefitted by this discussion. It will definitely help them to understand the market. (players, dynamics, opportunities)

 

[vijayvaliya]

I dont believe this!!! It is an investor forum, and nobody is able to reply on realty

 

[traderbas]

I dont believe this!!! It is an investor forum, and nobody is able to reply on realty

Aren't you happy with the 2 people who thanked you?

 

[vijayvaliya]

Aren't you happy with the 2 people who thanked you?

I am happy with it traderbas, but i felt it more important to have the discussion started among us.

 

[sumeetsj]

No doubt Real Estate as an asset class has given maximum returns in past 10 years.
Although i feel staying invested in stocks or commodities also would have been a great idea.

 

[vijayvaliya]

No doubt Real Estate as an asset class has given maximum returns in past 10 years.
Although i feel staying invested in stocks or commodities also would have been a great idea.

hi sumeetsj,

Like in stocks, real estate too, you may have some bad deals; but overall the returns from real estate is superior to return from equity.

 

[sumosanammain]

hi sumeetsj,

Like in stocks, real estate too, you may have some bad deals; but overall the returns from real estate is superior to return from equity.

The risks are too high. Once stuck, you cannot exit at the push of a button. Most real estate is illiquid. Only a few places are prime, otherwise, you may have to wait for a long time before you can get out.

In equity, if you have invested in any of the top 100 liquid names, you can exit in 1 second. Maybe less.
In equity you can diversify. I doubt a normal investor can buy 10 properties at a time across various localities. Whereas he can buy small qty of shares in 10 good companies

 

[timepass]

Real estate.. you need to continuously manage it, pay taxes, take care of the tenants, society affairs etc... not to mention attempts to push you out / hostile takeovers. Whereas the headache is much lesser with equities if you follow your stop losses, or put money in mutual funds. If you have an appetite for the various headaches, the nothing like real estate.

 

[sumeetsj]

Had it been if the prices of real estate were listed and would be constantly moving up and down in the ticker every minute(like our stocks and indices), the investors would have made same amount of money they have made ?

The answer is No.

Check out any asset class, I think the returns generated have been the same more or less in past 10 years.
One just needs to stay invested no matter what.
Just that its capital intensive. One needs to have loads to invest.
This does not mean that its not a good investment.

 

[vijayvaliya]

The risks are too high. Once stuck, you cannot exit at the push of a button. Most real estate is illiquid. Only a few places are prime, otherwise, you may have to wait for a long time before you can get out.

In equity, if you have invested in any of the top 100 liquid names, you can exit in 1 second. Maybe less.
In equity you can diversify. I doubt a normal investor can buy 10 properties at a time across various localities. Whereas he can buy small qty of shares in 10 good companies

I do agree with your contentions that real estate is having

1. lower liquidity

2. Entry barrier in terms of capital

compared to other asset classes.

But what we are trying to discuss is

is there ways to improve the liquidity, remove entry barriers in terms capital