Which one is better? buying an investment property in US or India?

priceline · Post by **priceline** » Sun Dec 23, 2007 9:32 am

I realized that I can take some money by refinancing my house. I am considering either buying an investment property here in US or in India.

Here is my thinking:

Buying in US:
Home prices are relatively low, and interest rates are ok at this point. I was reading that we can take depreciation on investment properties, I am not sure how does it work. [bought a book, have to read it].

In India, people are talking in crores. Have to have contacts to find a good property in India.

What are you suggestions? Thanks,

maheshbangalore · Post by **maheshbangalore** » Sun Dec 23, 2007 6:42 pm

Recently, I did refinancing and took the cash out of home equity and invested in India. If you are planning to R2I, I think it is better for you to invest on primary residence in India. I would recommend you to invest in gated communituies ( Villas ).

r2i2009 · Post by **r2i2009** » Sun Dec 23, 2007 7:56 pm

what about apartment complexes (2BR/3BR apartments) ? The prices of those appreciate nicely in a span of 2-3 years.

desihometown · Post by **desihometown** » Sun Dec 23, 2007 11:01 pm

maheshbangalore;66636Recently, I did refinancing and took the cash out of home equity and invested in India. If you are planning to R2I, I think it is better for you to invest on primary residence in India. I would recommend you to invest in gated communituies ( Villas ).[/quote]

Arent these "villas" in gated communities in the 2CR+ range ?

That is (app) 600K USD for a low end villa. high end (ozone / palm meadows)
villas are easily touching 4CR these days. (1M+ USD).

1M USD in Bangalore man, for a "villa".

maheshbangalore · Post by **maheshbangalore** » Mon Dec 24, 2007 4:56 am

Yes, The price of the villas totally dependent on the location in bangalore. If you are looking at good locations in white field, HSR layout, koramangala etc, the villas are in the range of 1.5 - 2 crores range as you mentioned (depends on the size of the plot).

Also, You can invest on residential plots within gated communities and build your own villa, when you R2I. I didn't invest on apartments as I was very much worried about the quality of constrution except with top builders

moreqa · Post by **moreqa** » Mon Dec 24, 2007 10:26 am

What is BDA?

maheshbangalore · Post by **maheshbangalore** » Thu Dec 27, 2007 8:42 am

BDA stands for Bangalore Development Authority. These sites are allocated by the government and is the most safest sites to buy.

Usually, it is very difficult to get the BDA sites from the direct allotment from the governement. You can buy the sites from the people ( second parties), who already own previously allocated BDA sites from government.

Going_nowhere · Post by **Going_nowhere** » Thu Dec 27, 2007 7:53 pm

MeraNaseebR2I:

For 1.2cr rupees, you'll not get a luxury apartment in Mumbai/Bangalore. The rental yield on apts in Mumbai are higher than in Bangalore, but rentals for a 1.2 cr apt will likely be in the range of 25000-30000 rupees.

When you invest in real estate, you don't look at yields put price appreciation and its very unlikely RE prices in India can sustain their upward momentum. RE in US has only started its downward trend and investment here is not a wise choice. In fact all asset classes have a high risk premium currently and money should not be "invested" at such prices.

sohu · Post by **sohu** » Thu Dec 27, 2007 9:37 pm

priceline,

It could depend on whether you are planning to R2I or will you LIA?

Things to consider:
- Potential returns on real estate is higher in India (advantage India)

- USD is expected to depreciate against INR for quite some time. If you buy the property now in India, you will probably come out ahead compared to if you were to convert USD to INR at a later stage (advantage India)

- India offers many choices for RE investments - it does not have to be a crore-plus villa. You can invest in land, apt, etc. in any budget.

- Remote maintenance

- You may have to convert white money in to black if investing in India. Off late, many builders do take 100% white so this may not be a problem but it surely will limit your choices for RE investments.

- You may also consider buying REITs

venkat786 · Post by **venkat786** » Thu Dec 27, 2007 10:23 pm

Good Points.

I like to add one more point -
RE in India is always risky. Land - danger for Kabjaa & Flat - tenants may never move.

In USA, there are no such risks. Added to that, you can be a remote land lord by giving to property management.

Go for USA ...

MeraNaseebR2I;67635For folks that are seeking to buy a second apartment/condo/townhouse etc.

I did some calculations ....

The net is this...

1. If you invest 1.2cr (~$307K) in India - say Mumbai or Bangalore for a luxury apartment - you might have to struggle a little but will eventually find a tenant that will easily fetch you Rs 40-50 thousand . A net return of 5.4 lakhs (~$13.8K)

2. For the same money - If you look for apartments/condos in places like - Charlestown, Sommerville (even Lowell) all of the above are towns around Boston. I know this market - others can find out relative places around their cities ...You can get rental income of $1200 - $1800 per month. Approx - $18K a year.

Rule of thumb in seeking a location for US investing is -
- proximity to commuter options - train/subway etc.
- yuppie neighborhood
- close to shopping (walking distance)

-----------
Downside in US investing is you are likely buying a old apartment/condo, so you need to be on your toes for any maintenance emergency. Also, you might have to re-finish the apartment interiors (possiby more $$ investment) to make it suitable for Yuppies). In India you are typically putting money in for a new apartment.

Anyway you slice and dice this - your income in US from renting a property is more.[/quote]