Investing in rental income properties can be a lucrative way to generate a regular passive income, but it’s not without its challenges. According to Anuj Puri, Chairman of ANAROCK Group, owning a rental property is not only financially satisfying, but it also keeps the property in use and can lead to future appreciation.
While rental income can help pay off a mortgage and provide tax benefits, there are substantial upfront costs to consider. The average gross rental yield in India is 4.54%, which means there can be a big gap between the monthly payments on a property and the rental income received.
Property values and rental demand are also subject to market fluctuations and local factors. Finding reliable tenants and managing the property can be time-consuming and challenging. Altaf Ahmad, CBO & Co-Founder of Azuro, emphasizes the importance of dealing with the responsibility of handling tenants, maintenance, and repairs.
A recent study shows rental growth across major Indian cities for 1BHK, 2BHK, and 3BHK properties. The data reveals fluctuations and potential changes in rental income across cities in the coming years.
Anshuman Magazine, chairman and CEO of India, SEA, MEA at CBRE, advises that location is a critical aspect to consider when buying a property for rental income. The neighborhood, infrastructure, and accessibility should be evaluated, as well as the amenities offered in the area. Another consideration is purchasing from reputable developers who focus on timely delivery of their projects.
It’s important to weigh the high initial costs, lower return on investment compared to other options, and potential disadvantages before investing in rental properties. Ultimately, making the decision to invest in rental income properties requires careful evaluation of one’s financial situation and the benefits and drawbacks of such an investment.