New Delhi: While most mutual fund investors are content with 12% CAGR over 10 years, some real estate investors subtly surpass 18–22% IRR by compounding hard assets, argues personal finance expert.
“This is how India’s new-age rich play the long game.” These are the views expressed by Sujith SS, founder of the personal finance platform Moneydhan, in his LinkedIn post.
Passive commercial income
To explain an investment idea, Sujith presented a financial case study and introduced Riya in his LinkedIn post. He says in the first year, Riya books two units for a new branded project launched in Gurgaon. “She’s buying early due to price entry discount,” he writes.
Sujith says that at launch, the flat costs Rs 1.2 crore. Similar flats nearby are going for Rs 1.5 crore. That’s a 20% discount. Riya books it with a staggered payment plan. “No EMI yet. No loan disbursement. Just early commitment,” he writes.
The tower is halfway up in year two, and the cost has slightly increased to Rs 1.4 crore. Demand is growing from NRIs and rental brokers. By year 3, as possession draws closer, the market value of her flat has increased to Rs 1.75 crore. Riya sells one unit and books a clean Rs 50 lakh gain. The other unit, she “Rent it out, earn 6% yield, and refinance against it at cheap rates,” he writes.
Sujith says that money from the sale of the flat is invested in a commercial unit. “Money that came after selling is invested into a pre-leased commercial unit near NH8. That commercial unit starts giving her 8% annual returns from Day 1.”
A structured wealth play
Sujith says, “This isn’t random investing. This is a structured wealth play.” He says, over 7–10 years, Riya repeats this process. She buys early, ahead of the crowd. She awaits the value’s unlocking. She exits smartly or converts to rental income. And finally, invests earnings in commercial assets with high yields.
Are there risks?
Sujith quickly warns against taking this tactic for granted. Legal entanglements, stagnant property values, and project delivery delays can all reduce returns. The hidden frictions one will face are bank loans, capital gains tax and registration and stamp duty, etc.
