Investment, Real Estate & New New Normal!

 

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“Successful investment is about managing risk, not avoiding it”... Benjamin Graham.

Benjamin Graham was a British-born American economist, professor and investor. He is widely known as the "father of value investing", and wrote two of the founding texts in neoclassical investing: "Security Analysis" with David Dodd, and "The Intelligent Investor".  And no wonder he can explain investments in such simple words as usually most people (including myself) are a bit wary of this "Economist" club, not because they are bad guys but we just can't understand what they want to tell us, such is the communication gap! Agreed the present Internet (Google/ whatsap) universities has made many of us authority of every subject & economics is no exception yet to know long-form of term GDP doesn't make someone an economist which you find at every corner. 

Well, I am no authority on investment or economics yet my media friend asked me to write something about real estate & investment in current scenario i.e. post lock-down (I mean lock-down two)  indeed I myself am a businessman & that way each of us is a businessman or businesswoman in our way is what I feel. Many will smirk on this comment as how can be a govt officer or a public sector bank employee or a private sector jobber or a housewife can be a businessman, have I gone nuts! Well, ask yourself whatever profession or job you are in, what is a business, in the first place?  By me business is where one person trades what he or she has for something he doesn't have or wants to have & that makes everyone of us a businessman (read as business woman too)! Because even if you are an employee in some govt or private organization then you are trading your man-hours (woman hours too) as well as knowledge (well, that's the point of argument) for money or post or power that post gives, accept it! Even if you are housewife then you are trading your efforts for your relations & seek happiness or words of praise from family members & no wrong in it as you earn it by what you put in for your family which in many cases giving away your own career or passion, so you trade your feelings as a housewife! All this makes everyone a businessman because every day we are trading something to gain something, even students gain knowledge by giving their time in studying!  You may think where this is going as where is real estate & investment, well for that one has to first understand the term named "Business" as without the business in place what, where & how you will invest anything to gain returns from that business, right? 

By now if you agree with my concept of business then lets come to real estate which is one of the three basic needs of human beings i.e. Makan (a home) along with Roti (food) & Kapada (clothing) & then there is a fourth category which is needed above these three! That's why real estate will always be safe bait because till the humans are here & growing they will need a place to live is a fact & you need not have to be an economist to know this fact! If you study the businesses & profits they have made you will find the fourth category industries keeps changing i.e. it may be Oil, Health, Entertainment, Power (electricity), Information Technology, Automobile & many such but first three categories were always along when it comes to returns on the investment. What keeps changing in these basic three categories of the business is as Benjamin said the risk percentage! Let’s keep away all other businesses for a while as our subject of interest is real estate i.e. Makan i.e. Homes & let me tell you, until a little past i.e. hardly six to seven years back this was the best investment option & everyone who touched it had hit the gold, such was the magic of real estate i.e. land or buildings in general! But when you forget that real estate also is a business & start running (read as playing) it as a gamblers den then disasters are bound to happen & so they did. I am not referring to just Pune but everywhere in the world real estate was always dear to the investors not for the sake of homes or their quality of the product or need but just for the kind of returns it used to give to the investors & it’s a bad business which exists only for making money, this I haven’t said, the great Henry Ford has said those words by himself! But who cares, investors were making money & loads of it so all was well & that’s why never anybody then used to ask, is it good to invest in real estate because it was always good! But then you can’t just keep building homes because you can build them, right? One has to look for the need & capacity of the buyer to fulfil that need of the homes (or offices) which the real estate's many people forget & that’s why now the question is being asked, is it good to invest in real estate? 

Again, real estate will be always best option for investment though  it’s a costly investment when it comes to figures (i.e. amount money wise) yet the product is non-perishable is the biggest advantage & you don’t have to protect it like gold or currency or it can’t vanish the way your bank deposit can vanish in a net banking scam neither its value can go down in one night from million to zero because of some fraudster management like it happens in share market, is the most important aspect of investment in real estate, by me! At the same time do remember, a lock & key ready to move in a flat or office or shop is the safest investment one can have but where that unit is located is what decides its fate as investment! This is the crux of investment in real estate! Because speaking about Pune & its applicable to any city or region as the real estate is very local business, just because land you can’t move from one place to another like any other goods. Why one will buy a unit in which you have invested is the question you should ask to yourself before investing in any real estate & this basic thing builders (businessmen) forgot & that's why supply become more than demand & if supply is not more than the need then sometimes it is beyond reach of the needy buyers, is the key factor in bad investment in real estate!  That way in real estate in Pune ask any person who has invested & got the product in his hands (possession) rightfully (read as legally) & he will confess that he has gained only, down the line five years maximum, is I can vouch for. Issue is, can you wait for that time & have you seen the future rightfully as in the real estate if you go by current market price then it’s ok to buy as a actual user of that home or the shop or land but if you are a investor then you should buy today which will appreciate in future. And the product should stand firm on two fronts, one is ability to sell the product at the right time & safety i.e. legal title of it!  If you are certain of these two aspects, rather the later one i.e. title then be assured about the investment returns usually follows! 

And for that it’s important to join hands with a pedigree name as the returns are directly tied with the legal possession of the property you have invested in, as what's the use of a piece of a paper which says you are owner of the land or a flat but it doesn't exists in actual, right? Speaking about returns, provided you have got a right partner for real estate investment (read as builder or developer) then maximum returns are from raw land  i.e. plots then the shop or commercial premise (office) in booking (under construction), then the flat in booking & lastly read possession units i.e. shop or flat. As the risk factor reduces so does the returns as per the chronology & again you need not have to be an economist to know this just a bit logical about the business named real estate! Coming back to Pune, it has all the raw material needed for the growth, even post-pandemic or two lock-downs as jobs are here, education is here; the two main reasons for which people migrate from their native places & settle in a city or a region. And on top of it Pune has water supply which again is an important aspect of real estate & most important is culture of the society as this is something each of us needs when our other basic needs are taken care of! All one has to do is make a bit of study of the locality where you want to invest in real estate & the people you are joining hands with & you will end up as the winner, mostly! 

Lastly, the most important thing about investment in real estate & this which you only can control & that is, your greed! When it's an investment of your money then usually it makes you blind to look at the risk factors which actually are facts I have mentioned & then even the best locations & best names can’t provide you the insurance for your investments if you can’t control your greed, not just in real estate but in any investment front! So, go ahead, choose wisely, choose with your greed in control & do buy a flat or a plot or a shop or a office for investment as people are going to need space of their own & the one who will have it & has patience to hold it till right time, is going to be a happy winner for sure! 

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Sanjay Deshpande 

Sanjeevani Dev.

Please view my sharing about real estate in Pune at U-Tube link below..

 

https://www.youtube.com/watch?v=g4xX7eopH5o&t=5s

 

Please do visit my blog links below to read about real estate & home buying! 

https://visonoflife.blogspot.com/2021/01/post-lock-down-real-estate-home-buying.html

http://jivnachadrushtikon.blogspot.com/

Creating Togetherness; team Sanjeevani Way(Click link below) 

https://www.flickr.com/photos/65629150@N06/albums/72157627904681345

For any of your complaints about city, log in at link below

www.punecorporation.org

Take your issues to Hon PM at link below..

https://secure.mygov.in/

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www.sanjeevanideve.com