Better to enjoy luxury home yourself than renting it out

Vincent Mathews is an NRI in Delhi. His luxury abode in South Delhi has been one of his prized possessions especially because this was his first investment after years of toil when he became a successful businessman in Dubai. Of late, he is confused whether to put his bungalow on rent or use it.

If you are an investor banking on rental returns, should luxury be your investment? In a webinar conducted by Magicbricks, Yash Joshi, managing director, RMZ Homes says, “In the luxury segment it is always better to be an end-user. If you give such properties on rent, it may fetch you only four per cent of your investment. Capital appreciation is a better source of returns and anyway it is always better if you do not compromise on your lifestyle.”

How long should you stay invested in a luxury property to make profit?

“From a short term perspective, the luxury segment does well. But with exclusivity comes responsibility. If you look at the lease benefits, it is merely the maintenance cost of your luxury property. While your flat may have cost you crores, its maintenance is also necessary. Depending on the kind of amenities provided, such additional costs vary from Rs 8-50 per sq ft.”

One of the common concerns among buyers is whether the money put in the maintenance of the flat adds any extra monetary value to the value of the property. Joshi says, “Doing up the interiors doesn’t mean you can ask for a better bargain. If you have put in an additional Rs 20 lakh, you have done it as per your choice and convenience. It might add quality but doesn’t substantially increase your profit.”

Gains in the luxury segment means you should wait for capital gains. “Buying a luxury property at the initial stages of a project completion and exiting after six to seven years is expected to give you substantial capital appreciation. This would be much more profitable than rental returns from the same property.”

As Joshi puts it, “A trophy home is insulated from money flows and political shifts.” These homes are estimated to be in the price bracket of Rs 5-50 crore and attempt to fuse convenience, technology and safety, which defines true luxury.

If you have a luxury house and are contemplating whether to use it or give on rent, weigh the situation to make a better decision!

Source:http://content.magicbricks.com/industry-news/delhi-ncr-real-estate-news/better-to-enjoy-luxury-home-yourself-than-renting-it-out/79902.html