I got talking with an Indian from Hyderabad who currently lives in Texas, and has an executive job for a big energy company; a Sri Lankan who lives in Canada; and a NRI from London; whilst abroad.
The topic inevitably turns to property at some point in the conversation, as it’s in the blood and psyche of the Indian. As the saying goes, you can take the Indian out of India but you cannot take the Indian out of him. They all had a passion for investing in property. The Hyderabadi was particularly astute. He purchased property for 15 years in Hyderabad, when they were only Rs 25 Lakhs each. His goal was to buy one a year, which he did for 15 years. Now each property is worth Rs 3 Crores. This means he has a substantial amount of assets in India, well into the millions and a solid base. Now if he wants to sell up and purchase in the US, where he resides, it’s an easy move for him.
His strategy was simple, he never bought a property for more than Rs 50 Lakhs and he only purchased when the market was down. Bread and butter property, as they say. Stuff that cannot really go any lower. His thinking was simple, he saw that property in India and China would rise to match with the western world, as the world was coming to a level playing field. This is certainly true; One only has to book a hotel in Mumbai or Delhi to see the prices, and they will not bargain either. Prices are on par with London, if not higher.
He said the fool will buy a property for Rs 1 Crore and the wise man will rent from him at Rs 25,000 pm. The logic being, there is a limit to the growth of the Rs 1 Crore property, and the yield of only 3%. Whereas, if you purchase low the potential for growth is far higher. At the time, the property price entry level was low relative to income, now there is a wide margin of difference in the multiples.
Clearly, he has done very well implementing these simple principles to his investment.
The NRI from London has done well too. She bought a property in Delhi for Rs 50 Lakhs, the property has grown to Rs 1 Crore in a few years. She was disappointed with the rental returns which were low, to be expected in India. However, with solid growth you can afford to be a little relaxed about the rental income side of investment. The Sri Lankan chose to invest in his new home, which is Canada, where he runs a business and invests in a moderate way along with some money lending on the side.
When I said that’s all great, but you should always grow your flowers where you can water them, it resonated with all of them. The Sri Lankan nodded his head furiously, saying that many people came to him to invest overseas, but he figured if everyone is coming to Canada to invest why should he go elsewhere?
The NRI from London agreed, and felt there is a lack of control, and it’s easy to put money in but hard to get it out again. The Hyderabadi, well his watering pipe reaches all the way from Texas to Hyderabad, as he has family and connections over there which means he can get things done over the phone and laptop.
Agony Agent Is Here To Help!
Q: We have had a horrendous experience; we were not able to live in the house we rent for 23 days after the boiler failed. The landlady wanted quotes before deciding to have the boiler replaced, but the whole process was long winded and stressful. My husband and I had to chase for updates on a daily basis while, my parents kindly put us up. We have asked our landlady for 23 days off our rent but she has refused stating that she has already lost money by paying for a new boiler, blaming the previous owner of the house for using cowboys. However, I’ve heard that it may be possible to have the 23 days rent off because we could not live in the house, is this correct and how do we go about it?
A: Your landlady certainly has a very bitter view of the world to say the least! You are quite right, you are entitled to compensation for the days when you were unable to live in the property, and are also probably entitled to further compensation for the inconvenience and stress suffered by you. Strictly speaking, if compensation is not agreed between you and your landlady, you are only entitled to payment if it is awarded by the court. However, one course of action is (assuming no agreement is reached) to deduct what you think is right from your rent, and say to your landlord that if she seeks to recover this sum through the courts, you will defend and counterclaim for compensation for the loss of service and stress and inconvenience suffered by you.
If you do this, note that if the landlord then tries to recover this money back from your deposit, you should not agree to have this decided by your tenancy deposit scheme adjudication service, as I understand that compensation for disrepair is not something that adjudicators are authorised to deal with, and they may award the money to the landlord.
As it is possible that court proceedings may be brought in the future, you need to make sure you keep full details of everything that happened. So, I suggest you write it up, so you can say precisely what days you were unable to stay in the property and keep a record of any other issues.
A message to all landlords: This situation is usually easily avoided by a simple apology to the tenants and an offer of portable heaters, discount on rent or something else that shows you are human and not like the lady above. Most tenants are reasonable, and would understand that you need more than the first contractor name that comes up on Google. At Sow & Reap, we arrange this for you, so you do not have to panic yourself with the running around and getting quotes.
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