Equity VS real Estate-the better investment
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Equity Valuation Techniques
Forum Discription: While valuing equities no individual technique works. Mostly it is a combination of techniques. Discuss the various techniques in equity valuation ranging from PE to RoE to Market Cap
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=3531
Printed Date: 01/Jul/2024 at 5:30pm
Topic: Equity VS real Estate-the better investment
Posted By: catcall
Subject: Equity VS real Estate-the better investment
Date Posted: 03/Feb/2012 at 3:15pm
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I have been into equities since quite some time now and overall it has been a profitable journey so far. Over the last five years i have diversfied into real estate (actual real estate, not shares of real estate companies,thankfully!!), and following are my observations:
1) The returns real estate investment is fetching me far outstrips gains in equites.
2)Corrections in real estate investments are milder ,especially in Tier -II and III cities as compared to stock markets, where strong short terms movements are seen in either directions.
3) Equities are obviously more liquid, but if you can give yourself a time span of six months on real estate, once u decide to sell, u can make a good deal (no panic selling)
4) Appreciation in real estate has been in this order of priority:a) land, b) commerical property,c)independent residential places d) flats.
5)Investing in houses only for the purpose of renting it is not such a profitable venture in most cases.
Views of TEDies who have experiences in similarly diversifing investments are welcome  ------------- There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing! |
Replies:
Posted By: manish962
Date Posted: 03/Feb/2012 at 3:30pm
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Real Estate Business is high risk, high reward kind of long term investment where the liquidity is demand driven and if you want to hive off property in recession, it is extremely difficult unless it is in the prime location or you are selling it at damn cheap rate. Also the taxation is other major difference.
Both are high return investments compared to all other asset class. A thorough study is required before jumping into it or you may lose your money in a big way.
Real Estate returns has outclassed that of equity in the last 5-6years. The same may not be the case for the coming 1-2years.
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Posted By: jayakrishnan
Date Posted: 03/Feb/2012 at 3:34pm
| Profitability in real estate has been very good in recent years, in last decade property prices have risen sharply hence it looks more profitable than equities but history is that Property prices appreciation is less than index appreciation...anyway if you feel you are doing well in it better continue with it as long as you feel comfortable...it is good to have a maximum of 65% in any one particular asset class beyond that might be risky.... |
Posted By: gaurav12123
Date Posted: 05/Feb/2012 at 2:35pm
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Here Is Process One Follow Before Buying Real Estate
1. He Will Visit land (plot)first 2. Then watch surrounding locality like who is your neighbours what is there class (middle , upper, lower. etc ) 3. After watching above 2 points he will look for distance for his land to bus station , airport , hospital ,school etc. 4. then he will take advice from to his broker , his friend , relative etc. 5. after getting satisfied to above all 4 he will then go to owner and start bargain. at last he will purchase that land. if any one of above condition is not fulfilling he will avoid his purchase. now think this process in moderate condition take 1 month to complete. And When any one have to buy stock he follow this 1.At 9.3 some joker bark @ tv buy ****** will get double in 1 year 2. he call his broker place order @ market price and buy. It take not more that 1 min to complete procedure and then ppl think that stock market is not good. if u give same time to stock market as u give to real-estate it will do wonders. ------------- When I Trade i Try To Earn Infinity. |
Posted By: FutureBull
Date Posted: 05/Feb/2012 at 8:43pm
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If you take out the effect of leverage which amplifies return on equity, it would be difficult to beat headline equity index returns unless it is undiscovered locality. This has been my experience. If say somebody has 50lac to invest real estate will require lot of physical efforts to generate 15%+ returns. Equity can still generate 20%+ (buy HDFC bank). I suggest folks to buy real estate on leverage if investible amount is less than 20lac. ------------- ‘The market always does what it’s supposed to — BUT NEVER WHEN’. |
Posted By: TCSer
Date Posted: 05/Feb/2012 at 9:19pm
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Investing in RE in India right now is fraught with risks.With prices in metros ruling higher then in sea facing aptts in USA its a bubble waiting to burst IMHO.
The major factor behind this exorbitant rise it seems is the black (no 2) component.With so much black money floating around only avenue to absorb it is gold n real Estate more so after UPA govt established the cutoff date of August 2010 as the date for enquiring info from Swiss banks.This is coinciding with meteoric rise in property prices all over India since Aug 2010. Wonder who all can afford these bubble like prices in India ------------- Share market is nothing but a game of temperament. Success mantra Right Price,Right Business,Patience, Conviction .Do not do panic buying or selling.It may be the only profession where inactivity pays |
Posted By: catcall
Date Posted: 05/Feb/2012 at 9:28pm
Point well taken, FB.I am not aware of land appreciation rates in other parts of India, but in Gujarat and Mumbai, where i have been involved in real estate.I am finding that the appreciation rates go atleast beyond index returns, infact more so if you invest in access of the sums you mentioned. In investing in land, I have found that buying land before the NA formalities are completed results in a healthy appreciation simply once the land in NA cleared. Yes I know this involves risks,(as does equites) which is why you need to spend some of your own time (and money) rather than depending upon the broker seller (including accessing govt offices, if required). Your point of "undiscovered locality" is also a effective way... I have found that investing at the start of any land sale project and then getting out once it is fully sold out gives good returns. I've currently a 80/20 allocation between real estate and equites and concentrated my equity portfolio on safe bets (incidentally HDFC Bank is one of them) Opinions are welcome! ------------- There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing! |
Posted By: S.Varghese
Date Posted: 05/Feb/2012 at 10:02pm
I don't know much about real estate and my only real estate is my house. But Kerala - where my ancestors are from - has seen significant appreciation in land prices over the last 2 decades. In Kerala even 21 years old boys know the price of land. Everyone is a RE consultant. I know a very close family friend who invested 1.25 lakhs in land and built a house on the plot (about 7500 Sq.Ft land). Now he says it quotes at more than 1.2 crores. That is an appreciation of 100 times which is about 18 % pa. Now this is extremely good but people will not consider the cost of the house built which would be at 2L at 1984 price. Then the property taxes, the cost of finding the renters, the brokerage, the maintenance, the cost of travel to take care of the property, etc. When we invest in a company the company sets aside some part of the profit as depreciation, but a RE investor does not do that. So for ordinary RE investor there are lots of hidden costs which is not considered when total returns are considered. Now it is my opinion that even 15% growth will not be sustainable but for the money sent to Kerala by expatriates from the Gulf. Good companies can give much better returns because of the productivity factor. ------------- Fools rush in where angels fear to tread. |
Posted By: abhijeet1
Date Posted: 13/Feb/2012 at 12:53pm
| I will go for real state as i have already invested in it. And till yet i have no loss. |
Posted By: robbie
Date Posted: 26/Mar/2012 at 3:07pm
Can you tell me more about it? I have actually been looking at real estate investing and I am currently on the search for the best place to invest. I came across this http://www.youtube.com/watch?v=AYIKYbsHZ34 - australian investor talking about his US property investment . His points include finding a good partner, a good location (Indianapolis was suggested) and a great team to go with it. Any thoughts about it? |
Posted By: extreme
Date Posted: 19/Jul/2012 at 11:25am
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With 40cr u can buy around 3000-4000sqft sea facing flat in best area in Mumbai.
But with same money u can buy big bunglow in Los Angeles :) http://www.businessinsider.com/ryan-phillippe-selling-los-angeles-home-for-7-million-2012-7 |
Posted By: vidurchhabra
Date Posted: 26/Jul/2012 at 6:53pm
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I wonder whether the following is true, that even though commercial real estate gives higher yields than residential, residential capital appreciation in the long run is more then commercial.
I have always been curious on this, Is this just a myth, or have actual studies been conducted? |
Posted By: yoda
Date Posted: 27/Jul/2012 at 5:35am
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just now i read this horrible article in first post dot com news...
http://www.firstpost.com/economy/house-of-horrors-how-buyers-are-taking-on-the-big-builders-393871.html?utm_source=MC_TOP_WIDGE i really can't believe my eyes that such reputed builder can do this. |
Posted By: gyansr
Date Posted: 28/Jul/2012 at 12:26pm
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The biggest problem in Indian real estate is people not buying a house but a plan to build a house. The moment you start paying for a plan to build a house, you become a business partner of builder without any rights, and like any other business, this business may fail. All these events will lead to a shake up in Indian market where people will refuse to pay money for a plan. They will only buy a house when it is ready to be occupied. Prolonged recession in real estate, will ensure that it happens sooner than later. |
Posted By: bojemrythem
Date Posted: 06/Aug/2012 at 12:28pm
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According to me real estate is better investment of other investment. In real estate this factors are very important because its also depends on economical condition. If you want to invest money in real estate than you have to manage every economical condition and its price is also depends on market prices. ------------- http://www.thebuytoletbusiness.com/ - Buy to Let Mortgages UK |
Posted By: extreme
Date Posted: 21/Aug/2013 at 3:52pm
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got call today from one builder in Pune to invest in their propery ... seems like time has come when nobody will their to save builders .... not even black money as that will also flow into elections |
Posted By: basant
Date Posted: 25/Aug/2013 at 9:32am
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Capitalism is all about death from market forces. Its about about saving someone or letting go of another. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |