Rental Properties in Patna and cash flow

At the height of the real estate boom in Patna, some people purchased rental homes in Patna without looking at whether the rental income was enough to cover all the expenses — including the loan if taken— and provide positive cash flows to the investor.

Going forward, investors should first be concerned about making sure that the properties in Patna they buy pay for themselves. For example, if one invests Rs 35, 000, 00 in down-payment to buy a Rs, 125, 000, 00 property, they should buy what gives them positive cash flows and more importantly a positive cash-on-cash return on their money.

Beware, because many propertiesin Patna, even with today’s lower prices, do not pay for themselves. In these cases the owners end up taking money out of their bank accounts on a monthly basis to cover the negative cash flow properties they have purchased.

Covering negative cash flow from your other savings is not a good investment strategy. Here’s why – look at these two flats purchased in Patna. One is a moderately priced 3 bhk flat inPatna and the other one is a luxury duplex:

COMPARING INCOME OF TWO PROPERTIES IN PATNA
Acquisition information	Moderately Priced Property	Luxurious Duplex
Property purchase price	45,000,00	1,25,000,00
Down Payment(15%)	6,75,000	18,75,000
EMI ( 10% Interest) 20 years term	36,671	96,502
operating expense monthly	2000	4500
Down Payment cost monthly ( 9% interest)	5000	14000
Total Cost of property per month	43,631	1,15,002
Monthly rental	15,000	30,000
monthly appreciation in rupee term ( 8 % annual appreciation on moderately priced property and 6% on luxurious property))	30,000	62,500
Total income from property per month	45,000	92,500
Net Profit/ loss Monthly	1369	-22502

The first property “moderately priced” property pencils out a nice positive return whereas the luxury ruins cash flows. Although the rent is higher on the second “fancier” property, it has significantly negative cash flows on operations per year. And going forward, this property will be negative on cash flows for years. Not only are you investing larger down payment, but continue to add to negative cash flows for over years before the property begins to make money.

The question you should ask yourself is, “Why didn’t I just buy a cash flow positive property?” like the moderately priced flat in Patna?

This is just one example and you need to put the property specifics into your analysis, do some research on realistic rents, area vacancies and expenses to make your own decision.

Just realize that in general, prize properties in Patna are no prize. It’s the moderately priced properties in Patna with decent rents compared to the purchase prices that have positive cash flows and are the real prize.

By: Piyush Mishra, founder www.buysellrentpatna.in

Naubatpur; an ace investment destination for land buyers in Patna

If you want to put your money somewhere and forget about it, buying land in suburbs of Patna like Naubatpur could be the investment vehicle you’re looking for. Think about it: land is a long-term, tangible asset that doesn’t wear out and doesn’t depreciate. If you go into investing in land with the intent of holding the right property for the long-term , it can make a lot more profits than any other investment asset class out there. Buildings can be replaced and demolished, whereas land is a valuable and finite resource , with only limited quantities available. And Bihar has a population of 15 Crores and per capita income of Biharis are increasing in double digits. Land investing is for the patient, smart investor, someone who is willing to hold for the long-term or pass it on as a legacy. It’s for the investor who is looking ahead for 10 – 15 years. Land is a smart long-term hold, allowing you to win the benefits of rising values. Especially if you buy in an area like Naubat

Land Prices in Patna and Patna Real Estate.

Buy Land in Patna It is the rising price of land in Patna that keeps the price of real estate in Patna always increasing because the land price is the most important price factor in the real estate price in Patna. But at the same time land prices in Patna are also dependent or better say partially dependent on real estate developments in Patna. With rising real estate developments the land prices too head northwards. This very symbiotic relationship between land prices in Patna and development in Patna real estate is major cause of real estate bubbles in Patna. Yes, it is interesting to decipher whether it is high prices of houses in Patna that makes the land prices in Patna higher or is it high land prices that makes buying a house in Patna exorbitant. The price of property in Patna is made of material cost, labour cost, intangibles like location & brand, marketing and administration costs (for builders and developers in Patna), registration & stamp duty cost, tax

WHAT IS THE MEANING OF “AFFORDABLE” FOR HOME BUYERS IN PATNA?

A survey conducted by our company on 100 flats’ buyers in Patna found that two out of every three homebuyer in Patna s ank in more than 50% of his total savings into the down-payment itself for purchase of flat in Patna . Flats as investment vehicle is never attractive in Patna as rental yields are very low in Patna and property prices in Patna are elevated in many localities. The ‘ideal flat in Patna’ should provide the convenience without the compromises, be affordable and have great resale value. Since this is an elusive dream, home-buyers in Patna should focus on one or two items on their wish-list. It is important to find a good middle-ground between utility and affordability while buying property in Patna . For a middle class resident of Patna, AFFORDABLE means property in Patna under the Rs 50 lakhs bracket. Because the AFFORDABILITY measure = Ratio of EMI to Monthly income. A middle class family in Patna earns around Rs 75000/- monthly income ( ear

Jewel of India1 March 2019 at 14:23
The rate of rental properties in Patna is sky rocketing. if we compare property of patna with
Luxury Apartment in Jaipur and luxury apartments in Gurgaon is amazing.
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Amanda10 November 2022 at 20:04
Greetings Piyush, you had done a handy job here for your readers and fans especially for them who are looking for renting properties and also property owners in Patna. I have heard a little bit about Patna. Perhaps it is in India? And happy to learn about Patna and its property renting trend and also real estate business development. That's really amazing. Here I can add Utopia Management Evergreen for the home or property owners in San Jose, CA. Maybe here some guys from San Jose will find this helpful.

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