how to make money in real estate?

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How can you make Money in Real Estate?

So tell us, where do you think is money in RealT Sector? Or is it just a fad & small investors can never

make out anything from this sector?

As far as what we have concluded from our secondary research data, it seems that more than 65% of

people are not interested in investing in real estate primarily because they think – “we require huge

investments to buy a property!”

We would not completely deny this fact but at the same time, it doesn’t entirely hold too. Before we go

any further and clarify this ‘myth’, let us first give you a glimpse of where money lies in RealT Sector:

Real Estate

Appraisal

Development

Brokerage

Transactions Management

Marketing

Relocation Services


So as apparent from the above categorization (we are assuming that you are a normal investor with not

much knowledge of other fields of real estate), there are several fields apart from transactions and

development from which you can make money in this sector. Take for example Relocation Services. By

relocation services, we mean that you can provide services to relocate people or businesses & arrange

for accommodation and other services in case required by them. This will provide you with an

opportunity to make some handsome amounts with fewer efforts.

Services like ‘Appraisal’ require technical knowhow of how to value a given property. If you have the

proficiency to do this, you can make this as your career and trust us, you won’t require anything else to

pursue as your profession.

On the similar lines is another vertical – ‘Property Management’. As Portfolio Manager is to Stock

Market, Property Manager is to Real Estate. And we think that we need not to reiterate how much

fortune a Portfolio Manager makes! If you have some expertise and experience in the field of real

estate, this is your place to be.

How can Small Investors invest in Real Estate?

This is probably the most important question that haunts every middle-class individual when he/she

starts earning. With the rise of middle class population in India in recent years, people who just graduate

from the universities look forward to invest in some vehicle. But due to unavailability of any structured

or convenient vehicle for investment in Real Estate, the obvious choice that they are left with is – Stock

Market or Fixed Deposits.

We would like to throw some light on how a mid-income group person or a small investor can invest &

make money in this market. There are several measures available for this purpose, few of which include:

Affordable Housing

Attractive EMI schemes

Joint Investments

Specialized loan agencies like Siloh Investments

REITs


Within the scope of this post, we will just try to explain Affordable Housing & later we will take on other

measures.

Affordable Housing

As per JLL’s report on ‘Affordable Housing in India – 2012’, there is no clear-cut definition of the term

‘affordable’. This is because it has different meanings in different scenarios as it is a relative concept.

Just going by KPMG’s definition of affordable housing, it can be seen as:

Income Level Size of Dwelling Unit Affordability

Economically Weaker Sections

<INR 1.5 lakhs pa Upto 300 sq. ft. EMI to Monthly

Income: 30% to 40% House price to annual

income ratio: Less than 5:1

Lower Income Groups INR 1.5-3 lakhs pa 300-600 sq. ft.

Middle Income Groups INR 3.0-10 lakhs pa 600-1200 sq. ft.

Source: KPMG

Affordable housing is a new concept which emphasizes on catering the needs of the above 3 mentioned

income group individuals. The differentiation is based mainly on the size of dwelling unit and the

location of the unit.

Small investors, typically falls under the umbrella of Middle Income Group. There are a number of

trusted and reputed players in the business of affordable housing all over India, mainly in the

metropolitan cities where the concentration of LIG’s and MIG’s is maximum:


Source: JLL Research, 1Q12

Closing Remarks: It is said “where there is will, there is way..” This falls apt in case of real estate

investing. Though seemingly very tough, it becomes simple if you want to devise ways in this sector. And

believe us, the pace and size of returns which you can expect from real estate is far more than any other

investment.

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