An acquaintance recently told me that his colleague had bought a flat for Rs 40 lakh and is selling it at Rs 80 lakh. He had made a down payment of only Rs 8 lakh at the time of buying the flat. According to him, real estate was the best investment option. This is something we hear almost every second day as financial planners. The person also believed that among various asset classes, money was being made only in real estate. Why was it so, he asked. To clear the cobwebs regarding real estate investment by taking a loan and to open up a myopic view on this subject, we made some calculations after agreeing on some basic assumptions.

Here are the calculations …