How to Calculate Right Property Returns Before Buying or Decision Making

How to Calculate Right Property Returns Before Buying or Decision Making? There are many financial factors that decide your property value. Below are some points and criteria that help you to check the property's actual price and also check if there is any bubble in the property market or hype created by brokers.

  • How To check the actual market value of a Property in India.
  • Method to detect real estates Bubble.
  • Check Property buying is overvalued or undervalued.
  • How to check property value if you know Rent of a property.
  • Decision Making with property valuation.

Let's Take an example of residential property and affordable housing property

Case1:- We buy a flat worth of 1.5 cr on main Sohna road and we get a rental income of 25000 per month in a Normal housing project.
Net Rental Income is = 25000*12 =3Lacs
Rental Yield - 3lacs/1.5cr=2%

Formula for Rental yield =Net Rental Income/Property Value

Case 2:- If we buy an affordable housing property with same size and locality with Maximum Worth of 32 Lacs and its rent is 12000 per month
So Net Rental Income is 12000*12=1.44lacs

So with the Rental Yield formula, it is 4.5%.

So with the perspective of Rent now you can figure out which is the best property to invest. But in Property Market you get two types of return on your property

  1. Rental Return
  2. Capital Appreciation.

Since India is a developing country you can get both types of returns. Some things also depend on market Heat.

Time needed: 5 hours.

How to check Market Bubble in Real estates of India

  1. Check Your Rental Return

    Above I Explain How to calculate Property Return

  2. Check Market Bubble

    calculate Rental YeildWith the Above image, if Your Rental Yield is 3to 4% then Market is neutral and if you get more than 4% return The it's a buy Decision.
    if the yield is Less than 3 % then living on rent is cheaper then buying a you don't have to buy in that condition. So there is a chance might Rent Get an increase rapidly or Prices of property Get Down.

  3. In Case of Commercial Property

    in case of commercial property if you get a return of more than 7% then it's a buy decision.

In Property Buying Decision there are many factors that affect property values.

In Case of affordable housing you are getting a rental return of 4.5% then its a buy decision


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