Wednesday, September 21, 2016

Pros and cons of buying real estate in Bangalore for young NRIs

Pros:
1) It is cheaper to buy in Bangalore than USA especially if buying in cities in California. You can pay off faster than when you buy in USA. A BDA site may cost about 150 thousand dollars while a house will cost about 200 thousand to 400 thousand dollars in Bangalore but will cost more in cities near SF, CA, USA.
2) If the values go down in a crash, it will still not go down as far down as it goes in USA.
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Cons:
1)If you don't have anyone trustworthy to look after your site or home, it is difficult to manage if you are sitting in the  USA.
2) Keeping it safe from land mafia goons is a problem; making sure you buy a land with clear titles is tricky as many deals and dealers are murky in Bangalore.
3) buying inside Bangalore costs almost the same as buying in California. Yet, it does not mean that you get a house with all the facilities you get in California such as 24 hour water and electricity; low crime rate in area; good schools in area, a civilized traffic; etc.
4)If you are never going back to India, then the home or site  remains as an investment with returns (rent for example)which don't mean much in dollars. When you sell the home or site, then, trying to convert the money into dollars and get it into USA and pay taxes in two countries may whittle away at the profit.
5)If you add up the interest and inflation effect, the money you get when you sell does not really indicate a high or even moderate profit.
If you borrow money to buy the house you simply don't make a good enough profit at the time of selling.
 Interest is around 10% in India in 2016 if you would like to borrow from banks to buy a house. 
 I simply cannot understand the way banks determine rate of interest in USA when people borrow...when I observe the rules of loaning in USA, I think that the bankers are  dacoits who have legalized the  criminal exploitation of bank's customers!
At least the Canadian banks don't seem to be unethical blood suckers to me!
6)Lots of apartments in Bangalore do not have adequate water supply or it's expensive. So investing in an apartment in Bangalore is a big no-no for me.
7)With oversupply of apartments in 2016, many houses & apartments are lying vacant and finding renters is difficult. Unless the property is in a prime area, it is likely to remain empty for a while.

8)Before investing in a house in Bangalore one has to consider many factors before selecting the location of the house: distance from nearest 'centre of city' such as Majestic, Malleshwaram, Jayanagar, etc. Does this area have a consistent water supply, electricity, undisrupted phone and internet connections...for this it is best to buy a house near to where the local politicians live such as Sadashivnagar and R.T.Nagar!  Consider the traffic and time it takes to travel from this house to various places. Make sure that  Crime rate in the area is low and it's not near any slums. If there are good schools and a good hospital in the area. Never ever buy a house in a 'low-lying-area' or an area which was previously a tank and has now been converted to sites buy the land sharks and politicians. Once in a few years, during heavy rains, the waters flood into the houses and the government suddenly decides to declare these houses illegal and the houses are bulldozed in a day, without much notice given by the state or city government! All of this has happened in 2015-2016. The people who lost their houses are helpless and flat broke as they put their life's savings into the houses.
It is impossible to sue the government or get any of your money back when your house is bulldozed.
 

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