A call from a Client
Building a good Property Portfolio. A client called me to enquire about a large plot, where he can build six houses.
I was a bit surprised, asked him: ” You have a pretty good bungalow, both sons have purchased flats, I think this is for renting?”
“No, I have sold part of my native place property, got money. Bank interest is not attractive, Can’t find any other option except property!”
This gentleman has virtually all types of properties – ancestral agriculture land, A Palacious antic wooden house in the village, three bungalows in three major cities, farmland, a gala in a mall. Two sons and one daughter, all of them employed, have a property of their own. This gentleman being miserly and too much poking and pricking none of his children nor his siblings – two sisters, are in good terms with him. To top it all, he has health problems! Only husband, wife in big bungalow, top floor given on rent, terrace for mobile tower, few galas on rent, Agri land on profit sharing basis. Few properties have legal issues as well. He is wisest in a way that he avails all services from a person like me, for no charges or meager sum.
Now he plans to buy a big plot to build houses for himself, children and his sisters. On retirement, all of them can come and stay together! He spent a good amount of time in accumulation, rather than enjoying it! Don’t know whether his family members would join him at all in the future.
Till a few years back owning property was a matter of choice. People engaged in their profession. gracefully retired and went back to their natives. At the most to their native town. Non-transferable and business people settled in their workplace town, however, preferred to go back to native in their old age. If you look back 30 to 40 years, almost all category people have settled in the metros, or tier two cities, only if they couldn’t buy one in these two types of cities, unwillingly they bought in the towns nearby.
Quite many have houses for themselves, plots or flats for their children. One of the major requirements or the dream of a lifetime is getting fulfilled sooner. People keep chasing properties, due to surge in income, due to lesser returns on investment elsewhere, or simply to park their funds. There is also a large section of the society that sacrifices all other priorities for a property. Not owning any may be a sin, you may be a failure! Owning as many properties as possible has become the norm.
Building a good Property Portfolio
What properties do we need to own? Residential, Commercial, Farmland, and many subcategories under these? Or a bundle of them?
Take a look at the olden days’ property ownerships. Chawl owner with 5-6-7 rented houses, Hotel owner with small ground-floor restaurant, 20-30 rooms in upper floors, Guest/Student rooms, leased properties such as petrol pumps, warehouses, stockyards, etc., All have lost their charms! Underwent massive functional changes.
Erstwhile property owners are not as happy as many of their peers.
Property has a life cycle. A trend emerges, peaks, troughs, and falls. One who keeps a watch on this and acts will be a winner.
Choose the property portfolio in accordance with today’s needs.
You should also be in a position to add value to it by engaging the property for suitable utility. Next property could be for your future requirements, be careful to be practical as you grow old you may be ill-equipped to undertake certain ventures – like agriculture or construction, etc., Hence buy a property where watch and ward, maintenance and management are systematically available.
If you still have a desire to buy more properties buy an easily liquid able asset like open land or plots. Better if you can find a young partner – siblings, children, trusted friends. It is more important to be able to sell it. Many people can only buy, they fail when they have to sell. If you are a poor seller better not to buy! Go for trusted investments – may be realty fund.
So the property portfolio should be primarily for our need, then for supporting future requirements, rest has to be liquidated. Keep an eye on the emerging trend, assess how long it may last. Herd mentality applies here too, when everyone is a buyer you be the seller!
Your ideas on property portfolio mix n match welcome. If you have a success story share with us.