Right Property Value in Indian Real Estate? - YouTube

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Namaskar, my name is Mukul, and welcome to asset Yogi.

Friends, we discussed in our last video that we should buy a house or rent it.

We have seen different factors in it.

And we also saw the financials.

If you have not watched that video, then you must watch that video,

You will find its link in the description below

In that video, we also talked about if we want to find out the exact price of the house.

whether its price is high or low. Is there any bubble in the market?

Are we buying an expensive property?

How can we find it out? We are going to discuss this point in this video.

keep watching this video

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I have taken two examples

I have taken one example from Delhi and one example from Chennai

We will try to see which house is expensive and which house is cheap.

These are actual examples.

Let us first talk about the example of Delhi.

Let's assume the price of a house is Rs 1.5 crore.

Here I have written ₹150 lakh

And let's say its rent is ₹25,000 per month.

See this is an actual example

On today's date, if we talk about a house or a flat worth Rs 1.5 crores in Delhi,

So its rent is approximately ₹ 25,000.

Prices differ depending on the locality so it may be slightly higher or lower.

But if we talk about the average, the rent will be approximately similar.

If you multiply this by 12, then how much will be the rent per annum?

The rent will be ₹3,00,000 per annum.

So what can you do? This is how you can calculate your rental yield.

If you calculate rental yield

R is the annual rent

Divide annual rent ( R ) by price

So you will divide 3 lakhs by 150 lakhs.

So your rental yield is 2%.

Now let us compare it with the other example

Let us move to the example of Chennai.

You are getting a house worth Rs 32,00,000

This is also a real example

I am talking about OMR, Old Mahabalipuram Road

There the rent of a house worth Rs 32,00,000 is ₹ 12,000 per month

So the rent per annum will be 1.44 lakhs.

So here too I have calculated the rental yield

What is rental yield?

These are your rental returns

Let's say you put 32,00,000 rupees in something so you will also expect returns from that.

So here we are receiving the returns. We are only talking about rental returns

so how much it is?

You divided the rent by the price

1.44 lakh divided by 32 lakh

So you get a rental return of 4.5%.

There are two types of returns in property

One is rental returns and the other is capital appreciation.

That means an increase in the price or value

And because India is a developing country Here you get both types of returns

Capital appreciation + rental returns

As you can see you are getting higher rental returns in Chennai

In Chennai, you are getting rental returns of 4.5% and we saw in the case of Delhi

we were getting only 2% rental returns

So now what is right and what is wrong

Can we think in Delhi that capital appreciation will always be high there?

That it will always beat rental returns. No, it is not like that at all.

Sometimes the market heats up.

Now let's talk about the historical rental returns in India.

Here we will compare so that we can understand

Is there a bubble in the market or not?

Let's talk about residential first. If you are getting 3 to 4% rental yield

That means it is neutral. You can buy as well as rent.

In a way, it's an equal deal but if you are getting a rental yield of more than 4%

That means that is a buy decision

That house would be a good fit for you to buy as you are getting good rental returns from it.

and if the rental yield falls below 3% this means it is more affordable to live there on rent.

You should not buy a house in such a place.

This means people are willing to pay excess money to buy a house.

So in such a case either the rent will increase.

Where the prices of the property have already increased, either the rent will increase.

or the price will be correct

The price will reduce.

See, even if the price does not decrease, then the rent will increase gradually

and the prices will remain the same.

So it can also happen as we discussed the Delhi market

that prices will be stable there for the next four to five years.

We have discussed residential.

So if you are getting a rental yield of less than 3%

So you should not buy a house in such a place.

If we only talk about rental yield.

There may be other factors that I discussed in my last video

Now let's talk about commercials.

You get a slightly higher rental yield in a commercial property

And your expectation is also slightly higher accordingly.

Here 5 to 7% is a neutral decision.

And if you get 5 to 7% rental returns then you can buy as well as rent.

You can consider the rest of the factors.

If you are getting more than 7% rental returns in commercial

So that's a great property to buy

And if you are getting less than 5% rental returns in commercial

This means it will be cheaper to take that property or shop for rent.

Your expectation should be at least more than 5%

Only then the buy decision will be right for you.

Let us come back to this decision

We were getting 2% returns in the Delhi case.

should you buy this house?

it is less than 3% then you should not buy this house

If we only talk about rental yield

Let us move back to Chennai house

Here you are getting rental returns of 4.5%.

So definitely it is a buy decision.

So if we only talk about rental returns

If our rental returns fall below 3% in the case of residential

So it is cheaper to live on rent.

If rental returns are above 4%, then the decision to buy is made.

you should buy that property

And if it is less than 5% then that commercial property will be cheaper to rent.

If rental returns are 5 to 7% or more, you can buy that property.

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