Real estate investment in India

I got a question which sounded very interesting and practical. A user asked me, “Whether he should go for an investment in real estate or should go for an equity based investment profile?” Though his question was to choose one of the two it looked like he he had lot of preference towards Real Estate and also mentioned the following reasons.

1. Being a service personnel he can get some good amount of Loan.
2. Tax benefits on the interest of Loan as well as 80C.
3. High chances of him loosing some good amount of money in equity compared to real estate.

I also looked at his reasons which he called it as benefits and I was not sure if he would follow if I suggest him some equity investment but then thinking about his benefits I have some answers to them.

Unless you are taking the Loan as Home Loan you are not eligible for the first 2 benefits. Home loan is the loan taken for the home where you plan to live in near future and you cannot have Home Loan for multiple properties. So if you qualify as home loan then you should have a home loan and go for Real estate investment but when it comes to third point I think you seem to loose more money in Real Estate than in Equities but its just that you do not feel the loss in real estate.

When you buy something in Equities you always is stuck to the price ticker, looking at the price of your stock or mutual fund on a regular basis but when it comes to Real Estate you do not tend to find the price of your property on a regular basis. If you can follow the same strategy for stocks then you can feel more comfortable and relaxed. The main reason we could not do this is because we have the price very easily regularly floating in front of us and also we are not quite sure about our investment and try to turn the investments as much as we can depending on the news flows.

So actually we do not do investment in equity but try to make quick bucks out of it but for real estate we are actually an investment minded. Its just that we need to change the mindset and nothing more.